11.52% India Infoline Housing Finance (IIFHL) Secured NCD-Dec-2013

IIHFL secured NCD December 2013 issue11.52% India Infoline Housing Finance (IIFHL) Secured NCD-Dec-2013

India Infoline Housing Finance Limited NCD has hit the market yesterday. The interest rates are 11.52% per annum. Last month Shriram Transport finance have issued NCD which offered 11.50%. Considering so many NCD’s are coming to market every month, investors are getting confused where to invest their money. In this article, I would detail about whether we should invest in India Infoline Housing Finance (IIHFL) NCD, what are its features and the risks involved in this NCD.

India Infoline Housing Finance (IIHFL) secured NCD of Dec-2013

IIHFL is the housing finance arm of India Infoline Limited which is one of the largest diversified financial services companies in India. India Infoline Housing Finance (IIHFL) is issuing 60 months secured NCD’s. For secured NCD the assets are backed up for principal and interest. In case of windup of company, investors of NCD would still get their principal investment and interest. In IIHFL NCD bonds are secured against the home and mortgage receivables.

Also read: Looking for tax savings, invest in these top-5 ELSS tax saving mutual funds

Features of India Infoline Housing Finance (IIHFL) secured NCD of Dec-2013

  • Start date: 12-Dec-2013
  • Closure date: 20-Dec-2013
  • NCD’s are available for 60 month period.
  • Interest rate is 11.52% per annum. Annualised yield works out to be 12.15%.
  • NCD’s are offered for Category-I, Category-II and Category-III of investors. Retail investors fall under Category-III.
  • Bond face value is Rs 1,000.
  • Minimum investment is for 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 in NSE and BSE. Hence these are liquid investments.
  • NCD’s can be invested through Demat form or Physical form.
  • Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
  • TDS would be deducted in case you take them in physical form.
  • The issue size is Rs 250 Crores with an option to retain additional Rs 250 Crore aggregating to Rs 500 Crores.

How the company is doing in terms of Financials?

Below are the details profit after tax

  • Year ended Mar-2009 – Rs 0.79 Millions
  • Year ended Mar-2010 – Rs 19.54 Millions
  • Year ended Mar-2011 – Rs 64.20 Millions
  • Year ended Mar-2012 – Rs 35.94 Millions
  • Year ended Mar-2013 – Rs 139.66 Millions
  • 6 months ended Sep-2013 – Rs 117.81 Million

Why to invest?

  • Company is making good profits, hence payment of interest would not be an issue.
  • Crisil rated this NCD as “Crisil AA-/Stable” and Care rated as “Care AA-/Stable” which indicates high degree of safety for timely payment of financial obligations.
  • These NCD’s are secured. Means in case of any unforeseen thing happening to the company, investors of NCD would still get the principal. Hence it is safe to invest in such secured NCD’s up to this limit.
  • Attractive interest rate of 11.52% for 60 months NCD. The yield works out to be 12.15% per annum.

Also read: Gold Mutual funds or Gold ETF's – Which is better?

Why not to invest?

  • Companies involved into financing business are little risky. Means the profits indicated now can reduce in future as it may need to reduce interest rates charged to customers and this can lower the margins.
  • These would be listed on stock exchanges, however in case of emergency you may need to sell before maturity at discounted price and you may not get bond price.
  • Parent company IIFL has recently issued NCD’s which offered 12% interest rates, hence IIHFL interest rates of 11.52% are low compared to parent company.

Download IIHFL NCD Dec 2013 issue prospectus

How would be post tax returns?

If you take NCD's in demat form, there would not be any TDS. However you are liable to pay income tax based on your individual income tax slab irrespective whether TDS is deducted or not. Below are post tax returns if you fall in various tax brackets

  • 10% tax – Post tax returns – 10.33%
  • 20% tax – Post tax returns – 9.15%
  • 30% tax – Post tax returns – 7.96%

Conclusion: India Infoline Housing Finance (IIHFL) NCD’s are secured. You can safely invest in such safe investment options and get good returns. Since these are traded on stock exchanges, these are liquid investments too. Though there are a few drawbacks, I personally feel you can invest in such safe investment options.

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India Infoline Housing Finance (IIHFL) NCD – Dec 2013 issue

Suresh KP


  1. An investor wouldn't need the nitty gritty of each and every NCD that exists in the market. In my opinion it is better to have just one article that gives comparision of top 5-10 NCDs. If any new NCD comes up, analyze and update the article if it makes to the top list. This way it would be easy and helpful for an average investor to invest in the best NCDs.

    The same approach could be followed other instruments such as bonds, mutual funds, stocks etc.

    1. Agreed Satish. But every day we are seeing a new investment scheme from companies, hence investors are looking for detailed analysis. I tried your method earlier, but people are looking for more info.

  2. I am looking for your analyses comments about best secondary market NCD available at current market. And thanks for your valuable information about investments.


    1. Srinivas, Investing in mutual funds for 3 years would be too short. If you still want to proceed, you can invest in debt mutual funds or balanced mutual funds. You can look for SBI Dynamic bond fund or IDFC bond fund in debt funds category. In balanced fund, you can look for ICICI Balanced fund or HDFC Balanced funds

  3. Hi Sir,

    i wish to invest 1 lac in IIHFL NCD as high interest rate as compare to FD. but  i was seen in internet sites

    1) Many user not got interest amount timely and

    2) If they want to trade in market, less buyer are avalilble as comapre to Shirram finance

    So Please suggest would i buy this NCD or wait for others.

    Also Please suggest me where i shall invest market NCD as you said that their many NCD available in secondary market at lower price.

    1. Manish, We could see the late payment of interest by many companies. Yes no doubt Shriram finance NCD was a good buy. You should always look for high rating NCD + secured NCD. Here this company NCD is secured, hence even if there is delay in interest payment, you WOULD get it. There are many NCD’s available in secondary market at discounted price where I am yet to analyse. I would do that in next 1-2 weeks.

  4. Hi Suresh,

    The post tax returns seem to be reversed. If you are falling in 10 % tax bracket, your post tax returns will be 11.52 x 0.9 = 10.33 %

    Similarly if you are in 30 % tax bracket, your post tax yield will be 11.52 x 0.7 = 7.96 %

    Please check it up.


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