India Infoline Finance NCD Aug 2019 Issue – Should you invest?
India Infoline Finance NCD Aug 2019 Issue Review
There is a flood of NCDs now. This indicates that there is severe financial Crunch in India in NBFCs. India Infoline Finance NCD for Aug 2019 Tranche-II would open for subscription on 6th August, 2019. It is issuing secured + unsecured NCD’s in this Tranche-II. The yield is as high as 10.5% per annum. India Infoline Finance has a good credit rating from Brick Works Ratings and Crisil. Currently banks are offering low interest rates and investors are looking high interest rate NCD’s. Should you invest in India Infoline Finance NCD of Aug 2019? What are the hidden factors an investor should consider before investing India Infoline Finance NCD of 2019? In this article, I would provide some interesting insights about India Infoline Finance Ltd NCD.
About India Infoline Finance Limited
The company is a Systemically Important Non-deposit accepting Non-Banking, Financial Company registered with the RBI, catering to the credit requirements of a diverse customer base with its plethora of products. Its offerings include home loans, gold loans, business loans including loans against property and medium and small enterprise financing, micro finance, developer and construction finance and capital market finance; catering to both retail and corporate clients. Company is a subsidiary of IIFL Finance Limited.
India Infoline Finance NCD Aug 2019 Issue details
India Infoline Finance is issuing secured and un-secured sub-ordinated, redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 100 Crores with an option to retain another Rs 900 Crores over subscription totaling to Rs 1,000 Crores. It comes with 6 different options, which contains 15 months, 39 months and 69 months tenure.
About India Infoline Finance Aug 2019 Unsecured NCD
They are offering secured and unsecured NCD’s now for Aug 2019. For un-secured NCD the assets are NOT backed up for principal and interest. In case something happens to company performance and company is closed, investors would be given normal preference in repayment of capital and interest.
India Infoline Finance NCD of Aug 2019 Issue Details
Issue start date: 6-August-2019
Issue end date: 30-August-2019
NCD’s are available in 6 different options.
The interest of these NCDs is payable monthly, quarterly 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.
Crisil have rated these NCDs as AA/Stable, Brickworks rated them as AA+/Stable and ICRA as AA/Stable which indicate that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.
Here are the interest rates on the Aug 2019 NCD’s of India Infoline Finance
What is the issue break-up?
Institutional Portion – 10% of the issue
Non Institutional Portion – 10% of the issue
High Net Worth Individuals – 40% of the issue
Retail Investors – 40% of the issue
How is the company doing in terms of Financials?
Here are the financials:
1) Total income from operations has increased from Rs 3,879 Crores for FY18 to Rs 4,909 Crores for FY19.
2) Net profit improved from Rs 464 Crores in FY18 to Rs 728 Crores in FY19.
4) Net NPA is at 0.64% as of March 31, 2018 Vs 0.62% as of March 31, 2019.
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Why to invest?
This is a Leading NBFC company in India.
Attractive interest rates where one can get 10.5% yield.
Good credit rating from Brickworks, Crisil and ICRA.
Why not to invest in India Infoline Finance Aug 2019 NCD?
1) Along with secure NCDs, it even issues Unsecured NCD’s. Unsecured NCDs are high risk. Means something happens to company performance and it gets windup, investors would be given less preference in repayment i.e. they would be given preference like any other creditor of the company for repayment.
2) Company, Directors, Promoter, and group companies are involved in certain legal and other proceedings. Any final judgment awarding material damages against them could have a material adverse impact on its future financial performance and stockholders.
3) Company’s inability to recover the amounts due from customers to whom it has provided secured and unsecured loans in a timely manner, or at all, and its full collateral and its customers’ failure to comply with applicable statutory or regulatory requirements in relation to such loans could adversely affect Company’s operations and profitability.
4) Financial performances are particularly vulnerable to interest rate risk and volatility in interest rates could adversely affect its net interest margin, the value of fixed income portfolio, income from treasury operations, the quality of its loan portfolio and its financial performance.
5) As on March 31, 2019, its top 20 borrowers represented 25.09% of the total Loan Book. Its inability to maintain relationships with these customers or any payment default by or credit losses of these customers could materially and adversely affect its business, future financial performance and results of operations
6) Any increase in the levels of non-performing assets on its loan portfolio, for any reason whatsoever, would adversely affect its business and results of operations.
7) In its housing finance business, they have significant exposure to the real estate sector and any negative trends affecting this sector could adversely affect its business and result of operations.
8) A significant component of its exposure is towards Mortgage loans and Real Estate sector and any factor affecting this sector could adversely affect its business.
9) They may not receive the full consideration for their commercial vehicle finance business which has been sold to IndoStar Capital Finance Limited.
10 The new Bankruptcy Code in India may affect its rights to recover loans from borrowers.
11) You can refer all risk factors in the Final prospectus of the company.
How to apply India Infoline 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 ASBA (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 India Infoline Finance Aug 2019 NCD are taxed?
Since you need to apply through the demat form only, there would not be any TDS 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 India Infoline Finance NCD of 2019 would get listed on BSE?
These India Infoline Finance Limited NCDs of August, 2019 would get listed after 6 working days from the date of closure. If it is subscribed earlier and subscription closes, it would get listed after 6 days from such closure.
Should you invest in India Infoline Finance NCD of Aug 2019?
Here are my few thoughts.
We are seeing NBFC companies delaying re-payments to the existing NCD holders. This company is still offering highest interest rates for these NCDs as NBFC companies are finding difficult to get loans in India. Political statements about one of the other NBFC company fraud is also major concern. NBFC Sector is a high risk sector now for any investments. I would advise investors to stay away from such high risk NCDs now. You can invest in some of the good large cap funds or consistent performing Multicap Mutual Funds that can provide high returns though not guaranteed.
Readers, do you feel these NCDs are worth investing?
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India Infoline Finance NCD Aug 2019 Issue Review