12.5% ICL Fincorp NCD November 2023 – Issue details and Review

ICL Fincorp NCD November 2023 – Introduction

ICL Fincorp Limited (erstwhile Jawahar Finance Limited) is coming up with secured NCD bonds that will open for subscription on November 28, 2023. The company is a non-deposit-taking and a systemically important non-banking finance company in India. The interest rates offered are up to 12.5%, and the yield is up to 13.73%. This article will provide some insights into ICL Fincorp NCD of November 2023 issue details, dates, pros, cons, and conclusion review.

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About ICL Fincorp Limited

The company is a non-deposit-taking and a systemically important non-banking finance company in the gold loan sector, lending money against the pledge of household gold jewellery in the states of Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, Odisha, Gujarat, and Maharashtra.

The company also provides loans against property, business loans, and personal loans.

Its Gold Loan portfolio for the quarter ended June 30, 2023, and Fiscals 2023, 2022, 2021, constitutes 99.26%, 99.20%, 97.51%, and 92.98% of its total loans and advances.

As of September 30, 2023, they had a network of 258 branches with a major presence in the southern states, including Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, and Odisha.

ICL Fincorp NCD November 2023 – Issue Details and Review

Who are the promoters of ICL Fincorp Limited?

The Promoters of ICL Fincorp Limied are Kuzhuppilly Govinda Menon Anilkumar, and Umadevi Anilkumar.

ICL Fincorp NCD November 2023 issue Details

Subscription opening Date 28-Nov-23
Subscription closure Date 11-Dec-23
Issuing Security Name ICL Fincorp Limited
Security Type Secured, Redeemable, Non-Convertible Debentures
Issue Size (Base) Rs 100 Crores
Issue Size (Option to retain over subscription) Rs 100 Crores
Total issue size Rs 200 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Series I to X
Minimum Lot size 10 bonds and 1 bond there after
Tenure 13 months to 68 months
Interest Payment frequency Monthly, Annual and Cumulative
Listing on Within 6 working days on BSE
Lead Manager Saffron Capital Advisors Private Limited
Debenture Trustee/s Mitcon Credentia Trusteeship Services Limited

ICL Fincorp NCD November 2023 – Interest Rates

Its NCD Debenture interest rates are as follows:

Series I II III IV V VI VII VIII IX X
Frequency of Interest Payment Monthly Monthly Monthly Monthly Cumulative Cumulative Cumulative Annually Annually Cumulative
Tenure (Months) 13 24 36 60 13 24 36 24 36 68
Coupon (% per Annum) 11.00% 11.50% 12.00% 12.50% NA NA NA 11.75% 12.25% NA
Effective Yield (% per Annum) 11.57% 12.13% 12.68% 13.24% 11.55% 12.36% 13.03% 11.75% 12.25% 13.73%
Amount on Maturity (In Rs.) 1,000 1,000 1,000 1,000 1,125.4 1,254.4 1,423.8 1,000 1,000 2,000

Financials of ICL Fincorp Limited

Here are the company financials. Amounts indicated are in Crores.

Period Ended 31-Mar-21 31-Mar-22 31-Mar-23 30-Jun-23
Total Income 75.90 88.50 110.80 110.80
Profit After Tax 1.30 2.02 3.22 0.98

ICL Fincorp NCD November 2023 – Why should you invest?

  • The company is a non-deposit-taking and a systemically important non-banking finance company in the gold loan sector, lending money. The company has consistently shown revenue and margin growth in the past. Investors should consider investing in a company with a consistent growth record.
  • It offers a high-interest rate of up to 12.5%.
  • The company offers secured NCDs. In case the company faces a financial crisis and winds up for some reason, secured NCD investors would receive preference in the repayment of the capital.

Also Read: 10 Largecap Mutual Funds with highest returns in last 5 years

ICL Fincorp NCD November 2023 – Risk Factors

  • ICL Fincorp credit rating is ACUITE BBB- from Accuite Ratings and Research Limited which is low.
  • Its entire branch network is concentrated in southern India, and any disruption or downturn in the economy of the region would adversely affect its operations.
  • Its business is capital-intensive, and any disruption or restrictions in raising financial resources would have a material adverse effect on its liquidity and financial condition.
  • Its financial performance is primarily dependent on interest rate risk. If it is unable to manage interest rate risk in the future, it could have an adverse effect on its business.
  • Its ability to lend against the collateral of gold jewellery has been restricted on account of guidelines issued by the RBI, which may have a negative impact on its business.
  • If it is not able to control the level of non-performing assets in its portfolio, the overall quality of its loan portfolio may deteriorate, affecting its financials.
  • Inaccurate appraisal of gold by company personnel may adversely affect its business and financial condition.
  • Since it handles high volumes of cash and gold jewelry in a dispersed network of branches, it is exposed to operational risks, including employee negligence, fraud, petty theft, burglary, and embezzlement, which could harm its financial position.
  • Investing in NBFC NCD bonds turned riskier in the past as there were defaults and delays in the payment of interest and repayment of capital. Investors should go through ICL Fincorp NCD risk factors in RHP.

ICL Fincorp NCD November 2023 – Should you invest?

ICL Fincorp Ltd is a non-deposit-taking and a systemically important non-banking finance company in the gold loan sector, lending money with consistent growth in revenue and margins. Its November 2023 NCD issue comes with attractive interest rates of up to 12.5%. In this issue, they are offering secured NCDs, which are somewhat safer compared to unsecured NCDs.

On the negative side, the company has a low credit rating of ACUITE BBB- from Accuite Ratings and Research Limited (its 2019 credit rating was Acuite BB+/Stable, 2021 was downgraded to Acuite B+, and the same rating continued in 2022). The entire business is concentrated in southern India, posing a regional risk. Investors should not forget about defaults and delays in the payment of interest/principal from NBFC companies in the past.

Investors need to review both pros and cons before investing in such NCD bonds.

Suresh KP

5 comments

  1. BBB- rating companies would have more skeletons in their cupboard than what they reveal or is in public domain.
    While interest rate is of course lucrative, one should be extremely careful in investing in such companies.

  2. dear Suresh,
    It seems to me that ICL Fincorp (erstwhile Jawahar Finance Ltd) are hiding or not revealing their association with Iringalakuda Credit & Leasing Co Ltd as both companies have one & same promoters !
    Thks, Tom

    1. You may be a native of Kerala or have some personal source of information about the group companies, which is not available in public domain, and therefore it is further advised to remain cautious.

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