9% IIFL Finance NCD Jan-2023 issue – Should you Subscribe?

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%).

IIFL Finance NCD Jan-2023 issue – Should you Subscribe

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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Suresh KP

6 comments

  • Vasumathy Shankar

    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

  • D S RAO

    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 .

  • Ashutosh

    which DEMAT account has this NCD

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