Indel Money NCD Review – Should you invest or Avoid?
Indel Money is coming up with Secured and Unsecured NCD bonds. These bonds would open for subscription on 23rd September 2021. Many of us might be hearing about Indel Money Limited for first time. Indel Money is a non-deposit taking nonsystematic NBFC in India. It offers up to 12% coupon interest rates and up to 12.68% yield which are attractive. These NCDs are offered for 366 days to 71 months tenure. Interest is paid either monthly or yearly or on maturity. Should you invest in Indel Money NCD September 2021? What are the risk factors one should consider before investing in such high risk NCDs? This article would provide complete review about the NCDs.
Also Read: JM Financial Products NCD offers 8.3% Yield – Should you subscribe?
About Indel Money Limited
They are a non-deposit taking and a non-systemically important non-banking finance company in India. Company is in gold loan sector lending money against the pledge of household gold jewelry in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana and the union territory of Puducherry.
They also provide loans against property, business loans and personal loans. Its Gold Loan portfolio FY21, FY20 and FY19 are 77.72%, 87.99% and 84.43% of its total loans and advances. They have a network of 191 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana and the union territory of Puducherry.
Indel Money NCD Issue Details – Sep-2021
NCD Subscription opens on 23-Sep-2021 and closes on 18-Oct-2021. These NCDs are issued on first come first serve basis, hence the issue can close before the closure date if it is oversubscribed.
NCD’s are issued in 11 different options. These NCD’s are issued for 366 days, 18 months, 36 months, 54 months, 61 months and 71 months tenure.
Coupon interest rates are between 9.25% to 12%. Yield on these NCD bonds works out up to 12.68% (highest).
It offers both secured NCD and unsecured NCDs.
Interest is payable monthly or yearly or on maturity depending on the option chosen by the NCD investor.
The face value of the NCD bond is Rs 1000.
Minimum investment is for the 10 bonds. Means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
These NCD bonds would be listed on BSE within 6 working days from the issue closure date. Hence these are somewhat liquid investments.
NRI’s cannot apply to this NCD subscription.
The base issue size for September 2021 NCD issue is Rs 75 Crores with an option to retain over subscription up to Rs 75 Crores totaling to Rs 150 Crores.
Vivro Financial Services is the lead manager for the issue.
Indel Money NCD September 2021 Prospectus
Indel Money NCD – Sep-2021 issue – Interest rates
What are the credit ratings for these NCDs?
These NCDs have been rated as BBB/Stable: Outlook Stable by CRISIL Ratings which indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.
How is the company doing in terms of profits?
Here are the details of profits of the company.
Year ending Mar-2019 – Rs 1.56 Crores
Year ending Mar-2020 – Rs 2.19 Crores
Year ending Mar-2021 – Rs 9.49 Crores
Why to invest in Indel Money NCD’s?
1) Indel Money NCD’s offer attractive interest rates where investors can get high interest up to 12% per annum and yield up to 12.68%.
2) Indel Money Limited is generating consistent and improved margins. This means that company has ability to pay interest payment on time to its NCD holders without any delay. However, one should note that the margins are thin.
3) It issues both secured and unsecured NCDs. Secured NCDs are safe compared to unsecured NCDs. In case company gets wind-up/shut down for some reason, secured NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.
Why not to invest in Indel Money NCD?
1) The impact of Covid-19 pandemic on company business is uncertain and cannot be predicted.
2) Its business is capital intensive. Any disruption or restriction in raising financial resources would have material adverse effect on its liquidity and financials.
3) Company financial performance is primarily dependent on interest rate risk. If they are unable to manage interest rate risk in future, it can have adverse effect on its net interest margins.
4) Company faces increasing competition in its business which may result in declining interest margins. If they are unable to compete successfully, its market share can decline.
5) Volatility in the market price of gold may adversely affect company financial condition and results of operations.
6) Refer prospectus for complete risk factors.
How to apply Indel Money NCD bonds?
This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.
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Indel Money NCD Review – Should you invest or avoid?
Indel Money NCD’s offer high interest rates up to 12% and yield up to 12.68%. Banks are offering low interest rates, hence such NCDs with high interest rates would attract investors. These NCDs are rated as BBB/Stable by CRISIL Ratings which are considered as low rating. Such credit ratings can further fall in future. One should always invest in A rated NCDs. For me, this NCD issue is HIGH RISK considering the credit rating provided by credit rating agency. I would advise investors to stay away from such high risk NCDs as of now.
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Rightly put Suresh ji. Blindly chasing interest rates can end pretty badly for an investor. I can still remember the Franklin fiasco which happened just last year. I think such high risk bonds can have some allocation in a portfolio but only up to that amount which one can afford to lose.
Thanks Rajeev for your comments
I live in Kochi where this company’s corporate office is located,but never heard of of it !
Hello Tom, I have been analysing NCDs / FDs in the last 9 years, I am hearing for first time 🙂
Interest rate is mouth watering. The only problem is BBB ratings.
Sir,
All your readers may not be fully aware of the rating stack (starting from highest to lowest) and therefore it would be of immense help if you also give a rating stack so that people can understand where this rating stands in overall terms.
Hello Kamal, We already wrote about credit ratings earlier and sometimes I link it to these articles too. However point taken, would try to put a paragraph about ratings in such NCDs wherever possible going forward
What is Rating Stack? Is it a complete chart of all possible ratings for a company? I am hearing this term for the first time being an ignoramus.
I would request Mr Suresh to answer this question because he would be better able to explain the nuances in written format with illustration for better understanding and elaboration.
Good analysis and advice, as usual.
Thank you Dr. Goswamy
Whenever a NCD having a promising Coupon rate materialises, the Credit agencies clamp down severely with a low rating! I am yet to see a NCD offering having the following simultaneously :
1) High coupon rate
2) Short tenure
3) High credit rating
That would be only dream. It is not that credit ratings are dependent on interest rates. For low credit ratings, company would offer high interest rates to attract investors, otherwise, investors would not invest in such NCDs.