Indiabulls Housing Finance NCD โ Dec-2023 – Introduction
Indiabulls Housing Finance Limited is introducing a secured NCD bonds issue, which has opened for subscription. Indiabulls Housing Finance Limited is one of the leading housing finance companies (HFCs) in India in terms of AUM. The NCD interest rates for Indiabulls Housing Finance NCD are up to 10.75%. These NCDs have a tenure of 24 months to 120 months, and interest is paid either monthly, yearly, or upon maturity. Should you invest in Indiabulls Housing Finance NCDs of the December 2023 issue? What are the risk factors one should consider before investing in such high-risk NCDs? Lets review this in this article.
Also Read: Best Balanced Advantage Mutual Funds to invest in 2024
About Indiabulls Housing Finance Limited
Company is one of the largest housing finance companies (HFCs) in India in terms of AUM. They are a non-deposit taking HFC registered with the NHB.
Company primarily focuses on long-term secured mortgage-backed loans. Majority of its loan book comprises of secured loans. They primarily offer housing loans and loans against the property to its target client base of salaried and self-employed individuals and micro, small and medium-sized enterprises. They also offer mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance for the construction of residential premises.
Indiabulls Housing Finance NCD โ Dec-2023ย – Issue details
Here are the issue details.
| Subscription opening Date | 07-Dec-23 |
| Subscription closure Date | 20-Dec-23 |
| Issuing Security Name | Indiabulls Housing Finance Limited |
| Security Type | Secured, Redeemable, Non-Convertible Debentures (Secured NCDs) |
| Issue Size (Base) | Rs 100 Crores |
| Issue Size (Option to retain over subscription) | Rs 100 Crores |
| Total issue size | Rs 200 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | Series I to XII |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 24, 36, 60, 84 and 120 Months |
| Interest Payment frequency | Monthly, Annual and Cumulative |
| Listing on | Within 6 working days on BSE |
| Lead Manager | Nuvama Wealth Management Limited Elara Capital (India) Private Limited Trust Investment Advisors Private Limited |
| Debenture Trustee/s | IDBI Trusteeship Services Ltd. |
Indiabulls Housing Finance NCD โ Dec-2023 – Interest rates
As per the Indiabulls Housing Finance NCD Dec-2023 prospectus filed with SEBI, here are the Indiabulls Housing Finance interest rates for Category III and IV investors (including retail investors). Investors should note that for specific tenure NCDs, the principal amount is repaid in installments, which is the biggest drawback in these NCDs. Please refer to the redemption schedule for more details.
| Series | I | II | III | IV | V | VI | VII | VIII | IX | X | XI | XII |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Annual | Monthly | Cumulative | Annual | Monthly | Cumulative | Annual | Monthly | Annual | Monthly | Annual | Monthly |
| Tenure (Months) | 24 | 24 | 24 | 36 | 36 | 36 | 60 | 60 | 84 | 84 | 120 | 120 |
| Coupon (% per Annum) | 9.65% | 9.25% | NA | 9.90% | 9.48% | NA | 10.15% | 9.71% | 10.50% | 10.03% | 10.75% | 10.25% |
| Effective Yield (% per Annum) | 9.64% | 9.64% | 9.65% | 9.89% | 9.89% | 9.90% | 10.14% | 10.14% | 10.49% | 10.49% | 10.74% | 10.74% |
| Amount on Maturity (In Rs.) | 1,000.00 | 1,000.00 | 1,202.65 | 1,000.00 | 1,000.00 | – | – | – | – | – | – | – |
Redemption process for Series VI to XII
Indiabulls Housing Finance NCD โ Dec-2023 โ Credit Ratings
These NCDs have been rated CRISIL AA / Stable by CRISIL Ratings and ICRA AA Stable by ICRA. Instruments with this rating are considered to have the highest degree of safety in terms of timely servicing of financial obligations, carrying very low credit risk.
How is the company doing in terms of profits?
Here are the details of the consolidated profits of the company.
Year ending Mar-2020 โ Rs 2,165 Crores
Year ending Mar-2021 โ Rs 1,201 Crores
Year ending Mar-2022 โ Rs 1,177 Crores
Year ending Mar-2023 โ Rs 1,129 Crores
Reasons to Invest inย Indiabulls Housing Finance NCD โ Dec-2023
- Indiabulls Housing Finance bonds offer attractive interest rates, allowing investors to earn up to 10.75% per annum.
- The company issues secured NCDs, which are safer compared to unsecured NCDs. In the event of the company winding up or shutting down for any reason, secured NCD investors would receive preference in the repayment of capital along with interest, as these NCDs are backed by the company’s assets. Therefore, investing in such secured NCD options is considered safe.
- The company holds a good credit rating of AA/Stable from both CRISIL and ICRA.
- It provides 12 flexible investment options, allowing investors to choose the one that best suits their preferences.
Reasons to Avoid Investing inย Indiabulls Housing Finance NCD โ Dec-2023
- The company’s profits are on a declining trend.
- The redemption of NCD amounts is done in splits for Series VI and above, meaning investors would not receive their principal amount in a lump sum upon maturity.
- Previous outbreaks of COVID-19 and lockdowns have impacted the company’s business. Any future outbreaks cannot be predicted and may affect the company’s operations.
- An increase in Non-Performing Assets (NPAs) can negatively impact the business.
- Please refer to the prospectus for a comprehensive list of risk factors.
Also read: LIC launches Jeevan Utsav Insurance Plan – Should you opt?
Indiabulls Housing Finance NCD โ Dec-2023ย โ Should you invest or avoid?
Despite increase in FD interest rates by banks and NBFCs, Indiabulls Housing Finance NCDs continue to offer high-interest rates and yield. The credit rating for Indiabulls Housing NCD is AA Stable, as assessed by CRISIL and ICRA, representing a good quality rating.
However, one should note that credit ratings are subject to change at any time. Investors should bear in mind instances such as the DHFL case, where NCD investors incurred losses. There have been occasions where NBFCs delayed interest payments and the repayment of investment amounts to investors. Additionally, some NCD series of this issue offer the repayment of capital in installments, a feature can be termed as good or bad. Personally, I consider this a significant drawback, as it involves investing a lump sum but receiving redemption in installments.
While these NCDs are secured, reducing the element of risk to some extent, high-risk investors should carefully evaluate these secured NCDs, taking into account all the associated risk factors.
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Hello Sureshji,
There is a differential interest rate offered for retail investors who are senior citizens or existing NCD holders. Can you pls include that information here for the benefit of all?
Thanks & Regards,
Sir,
It is perplexing to note that Indiabulls Housing has been regularly coming out with NCD issues for the last three months consecutively.
Either they have not been able to collct their targeted amounts in the earlier issues despite offering a very lucrative and attractive interest rate or they are seeing and foreseeing a huge demand appetite for their products and therefore want to secure their liability side by regularly mopping up money through such NCD issues.
You are requested to kindly give your valuable input on these matters as many of your readers would have invested good money into such previous NCD issues and therefore would like to know the finer niceties, details and potential risk factors.
Hello Kamalji
Oct-23 issue – Subscribed by 1.24 times
Sep-23 issue – Subscribed by 1.22 times
These are available on first come first serve basis, hence subscription would stop once it reaches tranche size.