IIFL Finance has come up with secured NCD issue that would open for subscription on 6th January 2023. IIFL Finance Limited (formerly IIFL Holdings Limited) is systemically important non deposit taking NBFC company in India. IIFL Finance offers interest rates are up to 9%. These bonds are issued in 7 different series and for a tenure of 24 to 60 months. Should you subscribe IIFL Finance NCD’s of January 2023 issue? What are the risk factors one should consider before investing in such high risk NCDs?
About IIFL Finance Limited
IIFL Finance is a systemically important non deposit taking NBFC registered with RBI. It offers home loans, gold loans and business loans including loans against property and medium and small-scale enterprise financing, micro finance etc., to both retail and corporate customers.
IIFL Finance Limited has two subsidiaries – IIFL Home Finance Limited (100%) and IIFL Samasta Finance Limited (74.34%).
Issue details of IIFL Finance NCD January 2023
| Opening Date | 06-Jan-23 |
| Closure date | 18-Jan-23 |
| Security Type | Secured, Redeemable and Converted NCDs |
| Issue Size (Base) | Rs 1,000 Crores |
| Issue Size (Shelf) | Rs 5,000 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 24, 36 and 60 months |
| Series | Series I to VII |
| Interest Payment frequency | Monthly, Yearly and Cumulative |
| Listing on | Within 6 working days on BSE |
NRI’s cannot apply to this NCD subscription.
Edelweiss Financial Services, IIFL Securities and Equirus Capital are the lead managers for the issue.
IIFL Finance NCD Jan-2023 Prospectus
What are the IIFL Finance NCD interest rates?
| Series | Months | Interest payment | Coupon Interest Rate | Effective Yield | Maturity Value |
|---|---|---|---|---|---|
| I | 24 | Annual | 8.50% | 8.49% | 1,000 |
| II | 24 | Cumulative | NA | 8.50% | 1,177 |
| III | 36 | Annual | 8.75% | 8.74% | 1,000 |
| IV | 36 | Cumulative | NA | 8.75% | 1,286 |
| V | 60 | Monthly | 8.65% | 9.00% | 1,000 |
| VI | 60 | Annual | 9.00% | 8.99% | 1,000 |
| VII | 60 | Cumulative | NA | 9.00% | 1,539 |
What are the IIFL Finance NCD credit ratings?
These NCDs have been rated as CRISIL AA/Stable by CRISIL Ratings and ICRA AA (Stable) by ICRA Ratings. It indicates 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.
How is the company doing in terms of profits?
Its consolidated profits are as below:
Year ended Mar-2019 – Rs 794.7 Crores
Year ended Mar-2020 – Rs 503 Crores
Year ended Mar-2021 – 761 Crores
Year ended Mar-2022 – 1,188 Crores
Why to invest in IIFL Finance NCD’s?
1) These NCDs offer attractive interest rates up to 9% and yield up to 9% per annum. Currently banks or financial institutions are offering lower rates compared to them, hence these are attractive investment options.
2) Good revenue and margin growth in the last 3 years (while FY20 there is dip). Investors should always invest in NCDs of consistently growing companies, as there are lesser chances that such companies would delay payment of interest or repayment of capital.
3) These NCDs are offered in 7 different series. Investors have a choice to invest in a series that are best suitable to them.
Why not to invest in these bonds?
Here are the risk factors of investing in these bonds.
1) Increase in NPAs can affect the company business.
2) Company is subject to supervision and regulation by the RBI as a systemically important NBFC, changes in RBI regulations governing can affect its business.
3) Company financial performance is particularly vulnerable to interest rate risk and volatility in interest rates can affect its business.
4) Refer NCD prospectus for complete risk factors.
How to buy IIFL Finance NCD?
These are issued only in demat form. You can login to your demat and trading account and check NCD’s link and select the IIFL Finance NCD issue and enter the investment amount and submit.
Should you invest in IIFL Finance NCD issue of Jan-2023?
IIFL Finance NCD offers high interest rates up to 9%. Currently banks or financial institutions are offering lower rates comparing to this. These are secured NCDs. Means if the company gets into financial crisis or shut down for some reason, investors will get preference in the payment of interest and repayment of capital. These NCDs are rated as AA by CRISIL and ICRA Ratings which are considered as good rating.
On the other hand, one should not forget about NBFC companies delaying payment of interest and repayment of capital. There are few cases of defaults too. Investors should consider these risk pointers before investing in such NCDs.
High-risk investors can invest in such NCDs. Low to moderate risk investors should stay away from such NCDs.
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Thanks Suresh.
Any plans of reviewing the “Indiabulls Commercial Credit Limited” NCD, which is ongoing in BSE? The insight from you would really help.
Thanks,
Vasumathy
Too many new NCD’s these days, not finding time to review all of them.
These are AA Rated bonds with good interest rates. You can go through the risk factors and comfortable, you can invest in them.
Thanks Suresh.
Informative message for MF investors.Can we have a similar one on debt funds also ? as the current rising interest rates are showing a positive impact on performance on short term debt funds .
Looks you were referring to mutual funds article and not this article. Yes, we would provide debt funds list too once I finish analysis next week.
which DEMAT account has this NCD