10.03% IIFL Finance NCDs of Mar 2021 – Only for HIGH RISK INVESTORS

IIFL Finance NCDs of Mar 2021 ReviewIIFL Finance NCDs of Mar 2021 – Only for HIGH RISK INVESTORS


IIFL Finance has come up with unsecured NCD bonds Issue that would  open for subscription on March 3, 2021. Fairfax and CDC group backed, IIFL Finance Limited is the leading NBFC company in India. IIFL Finance offers interest rates are up to 10% and yield works up to 10.03%. These bonds are issued in 3 series and for a tenure of 87 months. Should you invest in IIFL Finance NCDs of March, 2021? What are the risk factors one should consider before investing in such high risk NCDs?

Also Read: Top Performing Debt Funds with 1 year return up to 27%

About IIFL Finance Limited

It is a leading finance and investment services company India. They are engaged in home loans, personal finance, housing finance and financial advisory services.

Features of IIFL Finance NCD March, 2021 – Tranche I

Issue start date: 3-March-2021

Issue end date: 23-March-2021

NCD’s are available in the 3 series.  Series-I would provide interest every year,Series-II would provide monthly and Series-II would provide interest only on maturity.

It offers NCD bonds for 87 months tenure (7 years 3 months).

Coupon interest rates are between 9.6% to 10%. The yield is up to 10.03%.

These are unsecured NCDs.

Interest payable monthly, yearly and on maturity depending on the option chosen by the NCD investor.

The face value of the NCD bond is Rs 1000.

Minimum investment is for the 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. Hence, these are liquid investments.

NRI’s cannot apply to this NCD subscription.

The base issue size is Rs 100 Crores with an option to retain over subscription up to Rs 900 Crores totaling to Rs 1,000 Crores.

Edelweiss Financials, IIFL Securities and Equirus are the lead managers for the issue.

Download IIFL Finance NCD March-2021 Tranche I Prospectus

IIFL Finance Interest Rates of this issue

IIFL Finance NCD's Tranche-I - 2021 - Interest Rates

What are the credit ratings for these NCDs?

These NCDs have been rated as AA/Negative by CRISIL 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.

When these NCD bonds would be listed on stock exchanges?

The NCDs are proposed to be listed on BSE. The NCDs shall be listed within 6 working days from the date of the issue closure.

How is the company doing in terms of profits?

Its standalone profits are as below:

Year ended Mar-2018 – Rs 214 Crores

Year ended Mar-2019 – Rs 451 Crores

Year ended Mar-2020 – 148 Crores

Why to invest in these NCDs of IIFL Finance?

These NCDs offer attractive interest rates where investors can get interest up to 10% and yield up to 10.03% per annum.

Why not to invest in these bonds?

Here are the risk factors of investing in these bonds.

1) It issues unsecured NCDs. If something happens to company and company gets closed, investors of unsecured NCDs would get normal preference in the repayment of interest and repayment of capital.

2) Its margins have declined significantly in FY20 compared to FY19. Consistent profit making companies can provide regular interest payment to NCD investors.

3) The Spread of COVID-19 pandemic and the consequent nationwide lockdown might impact its operations and financial condition.

4) Refer prospectus for complete risk factors.

You may like: Which bank is offering highest fixed deposit rates?

Should you invest in IIFL Finance NCD of Tranche-I issue of 2021?

Here are our views.

1) Banks are reducing the interest rates in the past few quarters. IIFL Finance NCDs are rated as AA/(Negative) and offers high interest rates up to 10%. However, these NCDs are unsecured.

2) One should not forget about NBFC crisis that started 3 years back. Your interest payment or repayment of capital might get delayed if invested in the NBFC companies.

3) Investing for long term of 7.25 years in these unsecured NCDs would be high risk. If you are a high risk investor and willing to consider all the risks indicated above, you can invest in these NCDs. I would re-iterate again that these are high risk, hence invest only a small portion in such investment options.

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Suresh KP

6 comments

  • Vishnu Sharma

    We as beginners not much aware of the terms of NCDs would you recommend to invest big amount or small and that to for how much period please guide

  • Felix

    Sir, does IIFL have a good track record of timely interest and principal payments to investors? Also how have the subscription rates to these issues been in the past?

  • Kamal Garg

    With Prem Watsa of Fairfax and renowned global investors like CDC, both holding, combined, roughly 49-50% share capital in IIFL Finance, is it ok if we give better ratings to them, even if NCDs are unsecured.

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