Dhani Loans and Services Limited has come up with Secured NCD Bonds now in 2022. Dhani Loans and Services NCD bond issue would open for subscription on 4th January, 2022. Dhani Loans and Services (formerly known as Indiabulls Consumer Finance Limited) is NBFC registered with RBI and subsidiary of Dhani Services Limited, formerly Indiabulls Ventures Limited. It offers high interest rates upto 11%. Should you invest in Dhani Loans and Services NCD issue in Jan-2022? What are the risk factors in such NCDs?
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About Dhani Loans and Services Limited
Dhani Services Limited (formerly Indiabulls Ventures Limited) was incorporated in 1995.
Dhani Loans and Services Limited is a non-deposit taking systemically important NBFC registered with the RBI. It is fully owned / subsidiary of Dhani Services Limited (erstwhile Indiabulls Ventures Limited) which is a listed company in India.
Dhani Loans provides transaction finance to its customers through various product offerings on the Dhani App and also provide personal loans, secured and unsecured business loans to individual and corporates.
It is part of the Dhani group. Its Promoter, Dhani Services Limited (formerly Indiabulls Ventures Limited) is a consumer business that provides digital healthcare and digital transactional finance to its customers.
Dhani Loans and Services NCD issue details – Jan-2022
It offers secured NCD Bonds as part of this issue.
The issue opens on 4th January, 2022 and closes on 27th January, 2022.
These NCD bonds are available on first come first serve basis. Means if it is oversubscribed, it would get closed before the NCD closure date.
Interest rate are ranging between 10.03% to 11% per annum depending on the series chosen by the investor.
Interest is paid monthly, yearly or on maturity depending on the option chosen by investor.
These NCD are issued for 370 days, 24 months and 36 months tenure.
The face value of the NCD is Rs 1,000 per bond. One need to subscribe to 10 NCDs i.e. Rs 10,000 minimum and in multiples of 1 bond each.
These bonds would be listed on NSE/BSE. If investors need money, they can sell them on stock exchanges. However, the trading price could be different than the bond price.
Dhani Loans and Services NCD issue size is for Rs 150 Crores with an option to retain oversubscription for another Rs 150 Crores totalling to Rs 300 Crores.
These NCDs are issued in demat form only.
Edelweiss Financial Services Limited and Trust Investment Advisors Private Limited are the lead managers for this NCD issue.
Kfintech Technologies is the registrar of the NCD issue.
Dhani Loans NCD Prospectus link
Dhani Loans and Services NCD Interest Rates – Jan-22 issue
What is the Dhani Loans and Service NCD issue break-up?
Here is the issue break-up.
How Dhani Loans NCDs are secured?
The secured NCDs proposed to be issued will be secured by a first ranking pari passu charge on present and future receivables and current assets of the Issuer for the principal amount and accrued interest thereon as specifically set out in and fully described in the Debenture Trust Deed. The NCDs will have a minimum asset cover of 1.25 times on the principal amount and interest thereon at all times during the tenor of the NCDs.
Dhani Loans and Service NCDs are secured in nature. Means if something happens to the company and it gets shut down / wind-up, NCD investors would be given preference in the repayment of capital as well as the interest.
What is Dhani Loans and Services Limited NCD credit rating?
Dhani Loans NCD issue is rated as IVR AA/Stable Outlook by Infomerics.
Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
Why to invest in Dhani Loans and Service NCD?
Here are few positive points in these NCDs
1) These NCDs offer high interest rate between 10.03% to 11%. Currently A rated bonds are offering interest rates between 9% to 10%, hence such high rated bonds would definitely attract investors.
2) Company has good credit rating of IVR AA from Infomerics. Such credit rating indicate these instruments as low risk.
Why to invest in Dhani Loans and Service NCD?
Here are some of the risk factors in this NCD issue.
1) Company has been incurring losses in the recent past. It incurred Rs 115.82 Crore loss in FY21, 247.95 Crores loss for Qtr ending Jun-21 and Rs 74.6 Crores loss for Qtr ending Sep-21. In future, company might face difficulty in payment of interest to NCD interest holders.
2) Investing in NBFC companies NCD are high risk. As an example, DHFL defaulted NCD investors payments, SREI delaying the payment of capital and interest etc.,
3) Investors should read the NCD prospectus and understand the risk factors before investing in these bonds.
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Should you invest in Dhani Loans and Services NCD of Jan-2022 issue?
Dhani Loans NCD’s offer high interest rates up to 11%. It has good credit rating of AA from Infomerics.
I do not understand the math behind having such a good credit rating for a loss making company. Since company is incurring losses, in future, interest payments might get delayed.
High risk investors who understand all these risks can invest in these NCD Bonds.
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