Indiabulls Consumer Finance NCD Jul/Aug 2019 Issue – Should you invest?

Indiabulls Consumer Finance NCD JulAug 2019 Issue - Should you investIndiabulls Consumer Finance NCD Jul/Aug 2019 Review

Indiabulls Consumer Finance NCD for July 2019 Tranche-III would open for subscription on 31st July, 2019. It is issuing secured NCD’s in this Tranche-III. The yield is as high as 10.52% per annum and attracting investors now. Indiabulls Consumer Finance has a good credit rating from Brick Works Ratings and CARE. Currently banks are offering low interest rates and investors are looking high interest rate NCD’s. Should you invest in Indiabulls Consumer Finance NCD of Jul/Aug 2019? What are the hidden factors an investor should consider before investing  Indiabulls Consumer Finance NCD of 2019? In this article, I would provide some interesting insights about Indiabulls Consumer Finance Ltd NCD.

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About Indiabulls Consumer Finance Limited

Indiabulls Consumer Finance Limited (IBCFL) (erstwhile IVL Finance Limited) is a wholly owned subsidiary of Indiabulls Ventures Limited (IVL), one of the financial services companies of the Indiabulls group engaged in providing securities and derivative broking services. The company was incorporated on October 27, 1994 and in September, 2018, the name of the company was changed to ’Indiabulls Consumer Finance Limited’. The company is registered as a non-deposit taking systemically important non-banking finance company (NBFC-ND-SI) and is IBCFL is in the lending business with a primary focus on personal loans, unsecured SME loans and secured SME loans.

Indiabulls Consumer Finance NCD July 2019 Issue details

Indiabulls Consumer Finance is issuing secured redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 100 Crores with an option to retain another Rs 900 Crores over subscription totaling to Rs 1,000 Crores. It comes with 9 different options, which contains 400 days, 24 months, 36 months and 60 months tenure NCDs.

About  Indiabulls Consumer Finance July 2019 Secured NCD

They are offering secured NCD’s now for July 2019. The NCDs would constitute secured and senior obligations of Company and shall be first ranking pari passu with the existing secured creditors on all loans and advances/ book debts/ receivables, both present and future of Company equal to the value one time of the debentures outstanding plus interest accrued thereon, and subject to any obligations under applicable statutory and/or regulatory requirements.

Features of  Indiabulls Consumer Finance NCD of July 2019

Issue start date: 31-July-2019

Issue end date: 30-August-2019

NCD’s are available in 9 different options.

The interest of these NCDs is payable monthly, yearly and on maturity.

The face value of the NCD bond 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 on BSE and NSE. Hence, these are liquid investments.

Non-resident Indians (NRI’s) cannot invest in these NCD’s.

CARE has rated these NCDs as AA/Stable and Brickworks rated them as AA+/Stable, which indicate that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.

You can download  Indiabulls Consumer Finance NCD Tranche-III 2019 details here.

Here are the interest rates on the July 2019 NCD’s of  Indiabulls Consumer Finance.

Indiabulls Consumer Finance NCD July-August-2019-Interest Chart

What is the issue break-up?

QIB Portion – 20% of the issue

Corporate Portion – 20% of the issue

High Net Worth Individuals – 30% of the issue

Retail Investors – 30% of the issue

How is the company doing in terms of Financials?

Here are the financials in terms of standalone reformatted nos:

1) Total income has increased from Rs 654.3 Crores in FY2018 to Rs 1,650 Crores in FY2019.

2) Net profit increased from Rs 170 Crores in FY2018 to Rs 400.1 Crores in FY2019.

3) Net NPA is at 0.25% as of March 31, 2019 compared to previous year NPA at 0.01% as of 31st March, 2018.

Why to invest in these NCDs?

1) This is a Leading NBFC company in India.

2) Attractive interest rates where one can get 10.52% yield.

3) Good credit rating from Brickworks and CARE.

4) It is issuing secured NCDs which are safe to invest compared to other unsecured NCDs.

5) Its NPA is low in the NBFC industry.

Why not to invest in  Indiabulls Consumer Finance July 2019 NCD?

1) Instability of global and Indian economies and banking sectors could affect the liquidity of the Company, which could have a material adverse effect on its Company’s financial condition.

2) High levels of customer defaults and the resultant non-performing assets could adversely affect its Company’s business, financial condition, results of operations and future financial performance.

3) Its business has been growing consistently in the past. Any inability to manage and maintain its growth effectively may have a material adverse effect on its business, results of operations, financial condition and cash flows.

4) Company Promoter and certain of Directors are party to certain legal proceedings and any adverse outcome in these or other proceedings may adversely affect its business.

5) Its inability to maintain relationship with the top 20 customers or any default and non-payment in future or credit losses of its single borrower or group exposure where we have a substantial exposure could materially and adversely affect its business, future financial performance and results of operations.

6) They are vulnerable to the volatility in interest rates and may face interest rate and maturity mismatches between its assets and liabilities in the future which may cause liquidity issues.

7) Company is subject to supervision and regulation by the RBI, as an NBFC-ND-SI, and other regulatory authorities and changes in the RBI’s regulations and other regulations, and the regulation governing Company or the industry in which Company operates could adversely affect its business.

8) Company’s inability to comply with observations made by the RBI or any adverse action by the RBI may have a material adverse effect on its business, financial condition and results of operations.

9) Company’s inability to obtain, renew or maintain the statutory and regulatory permits and approvals which are required to operate its existing or future businesses may have a material adverse effect on its business, financial condition and results of operations.

10) Company may not be able to recover the full value of collateral or amounts which are sufficient to cover the outstanding amounts due under defaulted loans on a timely basis or at all and as a result, which could adversely affect its financial condition and results of operations.

11) Company’s business requires substantial capital and any disruption in the sources of its funding or an increase in its average cost of borrowings could have a material adverse effect on its liquidity and financial condition.

12) You can refer all risk factors in the Final prospectus of the company.

How to apply Indiabulls Consumer Finance NCD Issue of 2019?

You can apply these NCDs in demat form only. If you have demat account, you can login to your account and go to IPO/NFO/NCD section and apply for the same. The process of applying NCD would be through ABSA (Your amount would be blocked initially and upon allotment, your amount would be deducted and NCD allotment would be done, else your amount would be unblocked) You can reach out to any of the lead managers websites to know more details on how to apply them.

How  Indiabulls Consumer Finance July 2019 NCD are taxed?

Since you need to apply through the demat form only, there would not be any interest on the NCD’s. It is immaterial whether the company would deduct TDS or not, one has to declare the interest in their income tax returns and pay income tax based on the individual tax bracket.

When this  Indiabulls Consumer Finance NCD of 2019 would get listed on BSE?

These Indiabulls Consumer Finance Limited NCDs of July, 2019 would get listed after 6 working days from the date of closure. If it is subscribed earlier and subscription closes, it would get listed after 6 days from such closure.

What are the recent political developments about Indiabulls group?

Recently Subramania Swamy, BJP Leader has accuses of Rs 1 Lakh Crore Fraud in Indiabulls group. In the letter, Mr Swamy stated that, “As per credible information that I have, and after perusal of many available documents, I wish to inform you that India Bulls Housing Finance Limited and its associates which many Congress leaders, e.g., P Chidambaram and BS Hooda have patronized, is heading now for a financial collapse and bankruptcy, resulting large corruption issues in real estate sector, banking, stock markets and the loss of more than Rs. One lakh crores of funds of the public and of National Housing Bank.”.

Also Read: Highest FD Rates in India in July 2019

Should you invest in  Indiabulls Consumer Finance NCD of July 2019?

Here are my few thoughts.

While company issues secured NCDs, we are seeing NBFC companies delaying re-payments to the existing NCD holders. This company NCDs are still offering highest interest rates as NBFC companies are finding difficult to get credit in India. Political statements about fraud is also negative news about the company. I would advise investors to stay away from such high risk NCDs now. You can invest in some of the good large cap funds or Consistent performing Multicap Mutual Funds that can provide high returns though not guaranteed.

Readers, do you still feel one can invest in these NCDs?

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Suresh KP

Indiabulls Consumer Finance NCD Jul/Aug 2019 Issue – Should you invest

Suresh KP


    1. Jeyaram, We are already seeing default in payments by NBFC companies and this would go in massive in coming months/quarters. I would feel one should avoid now.

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