Indiabulls Consumer Finance NCD Feb-Mar 2019 Issue – Should you invest?
Indiabulls Consumer Finance NCD Feb 2019 Issue Review
Indiabulls Consumer Finance NCD for February 2019 Tranche-I would open for subscription on 4th February, 2019. It is issuing secured NCD’s in this Tranche-1. The yield is as high as 11.01% per annum and attracting investors now. Indiabulls Consumer Finance has a good credit rating from Brick Works Ratings and CARE. Currently banks are offering low interest rates and investors are looking high interest rate NCD’s. Should you invest in Indiabulls Consumer Finance NCD of Feb/March 2019? What are the hidden factors an investor should consider before investing Indiabulls Consumer Finance NCD of 2019? In this article, I would provide some interesting insights about Indiabulls Consumer Finance Ltd NCD.
Also Read: Top 10 Mutual Funds to invest in India
About Indiabulls Consumer Finance Limited
Indiabulls Consumer Finance Limited (IBCFL) (erstwhile IVL Finance Limited) is a wholly owned subsidiary of Indiabulls Ventures Limited, one of the financial services companies of Indiabulls group engaged in providing securities and derivative broking services. The company was incorporated on October 27, 1994 and in September, 2018, the name of the company was changed to ’Indiabulls Consumer Finance Limited’. The company is registered as a non-deposit taking systemically important non-banking finance company and is IBCFL is into lending business with primary focus on personal loans, unsecured SME loans and secured SME loans.
Indiabulls Consumer Finance NCD Feb 2019 Issue details
Indiabulls Consumer Finance is issuing secured redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 250 Crores with an option to retain another Rs 2,750 Crores over subscription totaling to Rs 3,000 Crores. It comes with 8 different options, which contains 26 months, 38 months and 60 months tenure NCDs.
About Indiabulls Consumer Finance Feb 2019 Secured NCD
They are offering secured NCD’s now for Feb 2019. The NCDs would constitute secured and senior obligations of Company and shall be first ranking pari passu with the existing secured creditors on all loans and advances/ book debts/ receivables, both present and future of Company equal to the value one time of the debentures outstanding plus interest accrued thereon, and subject to any obligations under applicable statutory and/or regulatory requirements.
Features of Indiabulls Consumer Finance NCD of Feb 2019
Issue start date: 4-February-2019
Issue end date: 4-March-2019
NCD’s are available in 8 different options.
The interest of these NCDs is payable monthly, yearly and on maturity.
The face value of the NCD bond is Rs 1,000.
Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
These NCD bonds would be listed on BSE and NSE. Hence, these are liquid investments.
Non-resident Indians (NRI’s) cannot invest in these NCD’s.
CARE has rated these NCDs as AA/Stable and Brickworks rated them as AA+/Stable, which indicate that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.
You can download Indiabulls Consumer Finance NCD Tranche-I 2019 details here.
Here are the interest rates on the Feb 2019 NCD’s of Indiabulls Consumer Finance.
What is the issue break-up?
QIB Portion – 20% of the issue
Corporate Portion – 20% of the issue
High Net Worth Individuals – 30% of the issue
Retail Investors – 30% of the issue
How is the company doing in terms of Financials?
Here are the financials:
1) Interest income was Rs 6.6 Crores for FY16 Vs Rs 26.2 Crores for FY2018.
2) Net profit improved from Rs 1.3 Crores in FY16 to Rs 191.5 Crores in FY18.
3) Net NPA is at 0.05% as of March 31, 2018.
Why to invest?
1) This is a Leading NBFC company in India.
2) Attractive interest rates where one can get 11.01% yield.
3) Good credit rating from Brickworks and CARE.
4) It is issuing secured NCDs which are safe to invest compared to other unsecured NCDs.
5) Its NPA is low in the NBFC industry.
Why not to invest in Indiabulls Consumer Finance Feb 2019 NCD?
1) Instability of global and Indian economies and banking sectors could affect the liquidity of the Company, which could have a material adverse effect on its Company’s financial condition.
2) High levels of customer defaults and the resultant non-performing assets could adversely affect its Company’s business, financial condition, results of operations and future financial performance.
3) Its business has been growing consistently in the past. Any inability to manage and maintain its growth effectively may have a material adverse effect on its business, results of operations, financial condition and cash flows.
4) Company Promoter and certain of Directors are party to certain legal proceedings and any adverse outcome in these or other proceedings may adversely affect its business.
5) Its inability to maintain relationship with the top 20 customers or any default and non-payment in future or credit losses of its single borrower or group exposure where we have a substantial exposure could materially and adversely affect its business, future financial performance and results of operations.
6) They are vulnerable to the volatility in interest rates and may face interest rate and maturity mismatches between its assets and liabilities in the future which may cause liquidity issues.
7) Company is subject to supervision and regulation by the RBI, as an NBFC-ND-SI, and other regulatory authorities and changes in the RBI’s regulations and other regulations, and the regulation governing Company or the industry in which Company operates could adversely affect its business.
8) Company’s inability to comply with observations made by the RBI or any adverse action by the RBI may have a material adverse effect on its business, financial condition and results of operations.
9) Company’s inability to obtain, renew or maintain the statutory and regulatory permits and approvals which are required to operate its existing or future businesses may have a material adverse effect on its business, financial condition and results of operations.
10) Company may not be able to recover the full value of collateral or amounts which are sufficient to cover the outstanding amounts due under defaulted loans on a timely basis or at all and as a result, which could adversely affect its financial condition and results of operations.
11) Company’s business requires substantial capital and any disruption in the sources of its funding or an increase in its average cost of borrowings could have a material adverse effect on its liquidity and financial condition.
12) You can refer all risk factors in the Final prospectus of the company.
How to apply Indiabulls Consumer Finance NCD Issue of 2019?
You can apply these NCDs in demat form only. If you have demat account, you can login to your account and go to IPO/NFO/NCD section and apply for the same. The process of applying NCD would be through ABSA (Your amount would be blocked initially and upon allotment, your amount would be deducted and NCD allotment would be done, else your amount would be unblocked) You can reach out to any of the lead managers websites to know more details on how to apply them.
How Indiabulls Consumer Finance Feb 2019 NCD are taxed?
Since you need to apply through the demat form only, there would not be any interest on the NCD’s. It is immaterial whether the company would deduct TDS or not, one has to declare the interest in their income tax returns and pay income tax based on the individual tax bracket.
When this Indiabulls Consumer Finance NCD of 2019 would get listed on BSE?
These Indiabulls Consumer Finance Limited NCDs of February/March, 2019 would get listed after 6 working days from the date of closure. Means it would get listed approx. On 13th March, 2019 assuming that it would continue till 4th March, 2019 i.e. the last date of subscription. If it is subscribed earlier and subscription closes, it would get listed after 6 days from such closure.
Should you invest in Indiabulls Consumer Finance NCD of Feb 2019?
Refer my earlier articles about NCD’s and you would get the answer. You should ask few questions before you want to invest in these NCDs.
1) Though Indiabulls Consumer Finance is offering secured NCDs, we are seeing that NBFC companies are delaying the interest payment due to the liquidity crunch in the company. Do you want to invest in such NCD’s then?
2) These NCD’s are for 26 months, 38 months and 60 months tenure. Do you want to park your money in high risk NCD for 5 years? We do not know how company would perform in 5 to 10 years, hence you should always invest in short term NCDs.You can look for 26 months or 38 months secured NCDs as these are for short term and they are secured in nature.
3) Indiabulls Consumer Finance NCD offers yield upto 11% interest per annum, however is high risk. If you are a high risk taker, investing in some of the aggressive hybrid mutual funds may be one of the best investment options that can fetch you 12% to 15 annualised returns.
Conclusion: Indiabulls Consumer Finance NCDs offers high interest rates. Secured NCDs are somewhat better compared to unsecured. If you are a high risk taker and willing to invest in such companies even after IL&FS Scam, you can consider investing in Secured NCDs for 26 months or 38 months. However, you should be willing to take the risks indicated above.
Readers, do you feel these NCDs are worth investing?
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Indiabulls Consumer Finance NCD Feb 2019 Issue Review