9.15% Indiabulls Housing Finance NCD Issue 2016 – Should you invest?
Indiabulls Housing Finance NCD Issue 2016 – Should you invest?
Last 2 NCD’s of DHFL got oversubscribed on day-1. Now with similar excitement, Indiabulls Housing Finance Limited (IBHFL) has come up with Secured NCD’s and Unsecured NCD’s which offers up to 9.15% annualized yield. Indiabulls Housing Finance would open for subscription on 15th September, 2016. How good is Indiabulls Housing Finance NCD issue 2016? What are the positive features of Indiabulls Housing Finance NCD Issue September 2016? What are the risk factors to be considered if you want to invest in Indiabulls Housing Finance Secured NCD’s?
About Indiabulls Housing Finance Limited (IBHFL)
Indiabulls Housing Finance Ltd. (IBHFL) is the 2nd largest private housing finance company in India, regulated by the National Housing Bank (NHB). They are a 'AAA' rated company. They are a part of one of India’s leading business conglomerates, ‘The Indiabulls Group’, which was established in 1999 with business’ spread across housing finance, real estate and wealth management.
Features of Indiabulls Housing Finance NCD Issue 2016
- Issue start date: 15-Sep-2016
- Issue end date: 23-Sep-2016
- NCD’s are available in 10 options. Option I to VII is for secured NCD’s and Option VIII to X for Unsecured NCD’s.
- Interest payable monthly, annual or at maturity depending on the option of NCD.
- NCD’s are offered for 3, 5 and 10 years options.
- 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/NSE. Hence, these are liquid investments.
- NRI’s cannot apply to this NCD subscription.
- These NCD’s are rated as CARE AAA by CARE and BWR AAA by BWR indicating stable outlook.
- IBHFL is planning to raise Rs 3,500 Crores with this issue with an option to retain another Rs 3,500 Crores totaling to Rs 7,000 Crores.
- Draft Prospectus can be downloaded this link
Interest rates for Indiabulls Housing Finance NCD Sep 2016 – Secured NCD's
Interest rates for Indiabulls Housing Finance NCD Sep 2016 – Unsecured NCD's
How is the company doing in terms of profits and CAR?
1) Its profits are as below:
- Year ended Mar-2015 – Rs 1,901 Crores
- Year ended Mar-2016 – Rs 2,345 Crores
2) The capital adequacy ratio is at 20% as on 30-Jun-2016.
Also Read: High Return Company FD Schemes to invest now
Why to invest in these NCDs?
- The company is earning consistent profits. There should not be issue of payment of interest at regular intervals.
- Attractive interest rates. It offers yield of 9% for secured NCD’s and up to 9.15% for un-secured NCD’s.
- It offers Secured NCD. In case of company performance is down and the company gets closed, investors of secured NCD would still get repayment of interest and principal amount.
Why not to invest in these NCD's?
- They are vulnerable to the volatility in interest rates and they may face interest rate and maturity mismatches between its assets and liabilities in the future which may cause liquidity issues.
- Any increase in the levels of NPAs in its AUM, for any reason whatsoever, would adversely affect its business, results of operations and financial condition.
- They are party to certain legal proceedings and any adverse outcome in these or other proceedings may adversely affect its business.
- Any downgrade in its credit ratings may increase interest rates for 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
- They are a listed HFC and subject to various regulatory and legal requirements.
- Other Internal and external factors can be read on page no. 12 of the NCD prospectus.
How the NCD’s are allocated?
- NCD’s would be allocated to following investors on a first come first serve basis.
- Reserved for Institutional Investors – 20%
- Reserved for Non Institutional Investors – 20%
- Reserved for High Networth Individual Investors – 30%
- Reserved for Retail Individual Investors – 30%
What does the company say about these NCD issue?
Indiabulls Housing Finance Vice-Chairman and MD, Mr. Gagan Banga says "Our company is coming out with its public issue of NCDs, which will help us in further diversifying our borrowings, reduce our cost of funds and also take advantage of the growth opportunities which we foresee in the sector".
IBHFL will use the proceeds for onward lending, financing as well as for repayment of interest and principal for existing borrowings, besides using it for general corporate purposes.
How to apply these Indiabulls Housing Finance NCD Issue 2016?
Indiabulls Housing Finance NCD Issue of 2016 is available in physical form as well as demat form. You can apply online with any of the broker where you are maintaining a demat account. For more information on this you can refer 1st page of the prospectus.
Conclusion: These Indiabulls Housing Finance Limited NCD’s offer secured and un-secured NCD’s. While unsecured NCD’s carry high risk, investors can invest in Secured NCD’s which offer upto 9% yield. These useful especially for low tax bracket individuals. Alternatively you can invest in good debt mutual funds which are tax efficient investment option which offer high returns.
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