InCred Financial Services has come up with secured NCD issue that would open for subscription on October 25, 2023. InCred Financial Services Limited (erstwhile known as KKR India Financial Services Limited) is systemically important non deposit taking NBFC company in India. InCred Financial Services offer interest rates are up to 10.3%. These bonds are issued in 5 different series and for a tenure of 18 and 36 months. Should you invest in InCred Financial Services NCD’s of October 2023 issue? What are the risk factors one should consider before investing in such high risk NCDs?
About InCred Financial Services Limited
They are a non-deposit taking systemically important NBFC registered with the RBI. Company caters to lower middle class to middle class Indian households for their personal finance needs like education loans, personal loans.
Correspondingly, it also offers secured and unsecured business loans to small businesses, secured loan to K12 Indian schools for their expansion plans, supply chain financing, lending to profitable financial Institutions and microfinance companies and escrow backed lending through its SME vertical.
InCred Financial Services NCD – Oct-2023 issue details
| Subscription opening Date | 25-Oct-23 |
| Subscription closure Date | 07-Nov-23 |
| Issuing Security Name | InCred Financial Services Limited (formerly known as KKR India Financial Services Limited) |
| Security Type | Secured, Rated, Listed, Redeemable, Non-Convertible Debentures |
| Issue Size (Base) | Rs 150 Crores |
| Issue Size (Option to retain over subscription) | Rs 150 Crores |
| Total issue size | Rs 300 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | I to V |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 18, 24 and 36 months |
| Interest Payment frequency | Monthly, Quarterly and Yearly |
| Listing on | Within 6 working days on BSE |
| Lead Manager | JM Financial Limited and Incred Capital Wealth Portfolio Managers Private Limited |
| Debenture Trustee/s | Catalyst Trusteeship Limited |
NRI’s cannot apply to this NCD subscription.
InCred Financial Services NCD Oct-2023 Prospectus
What are the InCred Financial Services NCD interest rates?
| Series | I | II | III | IV | V |
|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Quarterly | Monthly | Annual | Monthly |
| Tenure (months) | 18 | 24 | 24 | 36 | 36 |
| Coupon (% per Annum) | 9.48% | 9.55% | 9.66% | 10.30% | 9.84% |
| Effective Yield (% per Annum) | 9.88% | 9.88% | 10.08% | 10.28% | 10.29% |
| Amount on Maturity (In Rs.) | 1,000 | * | 1,000 | ** | 1,000 |
* Staggered Redemption in eight (8) quarterly payments of ₹ 125 each, starting from 1stquarter** untilmaturity
** Staggered Redemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st anniversary** until Maturity
What are the InCred Financial Services NCD credit ratings?
These NCDs have been rated as CRISIL A+/Stable by CRISIL Ratings. It indicates that Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
How is the redemption done for Series II and Series IV NCDs?
For Series II – Set out below is the principal redemption schedule, Redemption Amount and Principal Outstanding for the Series II NCDs.
For Series IV – Set out below is the principal redemption schedule, Redemption Amount and Principal Outstanding for the Series IV NCDs.
How are the company financials?
Why to invest in InCred Financial Services NCD?
1) These NCDs offer attractive interest rates up to 10.3%. Currently banks or financial institutions are offering lower rates compared to these rates, hence these are attractive investment options.
2) These are secured bonds. Means, in case the company gets into financial crisis and shut down for some reason, NCD investors would get preference in repayment of capital and interest.
3) These NCDs are offered in 5 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) Company customers may default on their repayment obligations, and that could have an adverse impact on its business
2) Any increase in the levels of NPAs in its AUM, for any reason whatsoever, would adversely affect its business
3) Its loan book comprises of unsecured loans. Its inability to recover the amounts due from customers in connection with such loans in a timely manner could adversely affect its operations and profitability
4) Any downgrade in company credit ratings may increase interest rates for raising new debt, refinancing its outstanding debt, which would increase its financing costs, and adversely affect its future issuances of debt and its ability to borrow on a competitive basis
5) Credit ratings may not reflect all risks. Any downgrading in the credit rating of its NCDs may adversely affect the value of NCDs and thus its ability to raise further debts
6) Refer NCD prospectus for complete risk factors.
How to buy InCred Financial Services 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 InCred Financial Services NCD issue and enter the investment amount and submit.
Should you invest in InCred Financial Services NCD issue of Oct-2023?
InCred Financial NCD offers high interest rates up to 10.3%. Currently banks or financial institutions are offering lower rates compared to such rates, hence these would definitely attract investors. 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 A+/Stable by CRISIL Ratings which are considered as good rating.
On the other hand, there are risk factors of investing in such NCDs. The redemption procedure for Series II and IV would be done in a staggered manner and not in a lump sum.
Also, investing in NBFC company FDs has turned to be riskier. In the past, we could see NBFC companies defaulting NCD payments and in some cases NCD investor’s interest payment got delayed several times in the past.
Investors who understand all these risk factors can invest in these NCDs.
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