10.5% IIFL Samasta NCD Jun-2024 issue – Should you Invest?

IIFL Samasta NCD Jun-2024 issue – Introduction

IIFL Samasta Finance Ltd (formerly Samasta Microfinance Ltd) has come up with a secured NCD issue that will open for subscription on June 3, 2024. IIFL Samasta Finance Limited is an NBFC and Microfinance Institution in India. These NCDs offer interest rates of up to 10.5% and are issued in 6 different series with a tenure of 24 to 60 months. Should you subscribe to the IIFL Samasta NCD Jun-2024 issue? What are the risk factors one should consider before investing in such high-risk NCDs?

About IIFL Samasta Finance Limited

Company is a systematically important Non Banking Finance Company – micro Finance Institution in India.

It offers innovative and affordable financial products to women who are enrolled as members and  organized  as Joint  Liability  Group  (JLG) from  unbanked  sections  in  society  including encompassing cultivators, agricultural laborers, vegetable and flower vendors, cloth traders, tailors, craftsmen, as well as household and industrial workers across rural, semi urban and urban areas in India.

Company is a subsidiary of IIFL Finance Limited. It offer wide  range  of  loans tailored  for  underserved  individuals  who lack  access  to  traditional  banking  services and includes income generation loans, top-up loans, loan against property, micro enterprise loan, Lifestyle and Family Welfare loans such as dairy cattle loan, sanitation and hygiene, acquisition of daily-use items like cook stoves, water purifiers, solar lights, mobile phones, and other products enhancing their way of life.

Going beyond its financial services, Company also provides non-financial services, including life and hospicash insurance, along with financial counseling, ensuring comprehensive support for its valued customers. Its average cost of borrowing in Fiscal 2023 and six months period ending September30, 2023 were 9.98% and 10.49%, respectively.


IIFL Samasta NCD Jun-2024 – Issue Details

Here are the details of IIFL Samasta NCD Tranche-II issue.

Subscription opening Date 03-Jun-2024
Subscription closure Date 14-Jun-2024
Issuing Security Name IIFL Samasta Finance Limited
Security Type Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base) Rs 200 Crores
Issue Size (Option to retain over subscription) Rs 800 Crores
Total issue size Rs 1,000 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Series Series I to VI
Minimum Lot size 10 bonds and 1 bond there after
Tenure 24, 36 and 60 Months
Interest Payment frequency Monthly and Annual
Listing on Within 6 working days on BSE
Lead Manager IIFL Securities Ltd
Nuvama Wealth
Trust Investment Advisors
Debenture Trustee/s Beacon Trusteeship Ltd.

IIFL Samasta NCD Jun-2024 – Interest Rates

Here are the interest rates. No additional interest is paid to either employees or existing members / subscribers of the earlier NCD issues.

Frequency of Interest Payment Monthly Annual Monthly Annual Monthly Annual
Tenure (Months) 24 24 36 36 60 60
Coupon (% per Annum) 9.20% 9.60% 9.57% 10.00% 10.03% 10.50%
Effective Yield (% per Annum) 9.60% 9.60% 10.00% 10.00% 10.50% 10.49%
Amount on Maturity (In Rs.) 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00 1,000.00

IIFL Samasta NCD Jun-2024 – Credit Ratings

These NCDs have the following credit ratings:

  • CRISIL AA-/ Watch Developing (Continues on ‘Rating Watch with Developing Implications’)
  • ‘Acuite AA | Rating Watch Negative Implications’ by Acuite Ratings and Research Limited.

These ratings indicate that instruments with this rating are considered to have a high degree of safety regarding the timely servicing of financial obligations and carry very low credit risk. Investors should note that last 6 months back the credit ratings do not have these words “Watch” or “Developing”.

IIFL Samasta Finance Limited – Profits

Its profits are:

  • Year ended Mar-2022 – 50.61 Crores
  • Year ended Mar-2023 – 128.17 Crores
  • Year ended Mar-2024 – 503.04 Crores

IIFL Samasta NCD Jun-2024 – Why to invest?

  • These NCDs offer attractive interest rates of up to 10.5% and yield of up to 10.5% per annum. Currently, banks and financial institutions are offering lower rates in comparison, making these NCDs an attractive investment option.
  • The company has generated good margin growth in the past. Investors are advised to consider NCDs from companies with growing margins.
  • These NCDs are available in 6 different series which gives flexibility to the investors to invest in the option suitable to them.

IIFL Samasta NCD Jun-2024 – Risk Factors

Here are the risk factors of investing in these bonds.

  • A downgrade of its credit ratings may increase borrowing costs, adversely affecting net interest margins and overall results of operations.
  • An increase in the levels of non-performing assets (NPA) on its loan portfolio could have adverse effects on its business.
  • Certain conditions and restrictions in its financing arrangements could limit its ability to conduct business and operations.
  • Volatility in interest rates could have a material adverse effect on net interest income.
  • Investors are advised to refer to the IIFL Samasta NCD Jun-2024 RHP prospectus for a complete understanding of the risk factors.

IIFL Samasta NCD Jun-2024 – Should you invest or avoid?

  • IIFL Samasta NCD Jun-2024 Tranche-II offers high-interest rates up to 10.5% which are high compared to FD’s offered by banks and FDs and NCD’s offered by financial institutions. Secured NCDs provide some security compared to unsecured NCDs. These are rated as AA by CRISIL and Acuite Ratings, which are considered to be good credit ratings.
  • On the downside, credit ratings can change in future. Investors should not forget about NBFC’s which have defaulted the payments in the past. Some of the NBFC’s have also delayed the payment of interest and repayment of capital too.

High-risk investors who understand all these risk factors may invest in such NCDs.

Suresh KP

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