10.15% Indiabulls Housing Finance NCD – Jul-2023 – Details and Review

Indiabulls Housing Finance Limited is coming up with secured NCD bonds issue which would open for subscription on 10th July, 2023. Indiabulls Housing Finance Limited is one of the leading housing finance company (HFCs) in India in terms of AUM. The NCD interest rates for Indiabulls Housing Finance NCD are up to 10.15%. These NCDs have a tenure of 24 months to 60 months. Interest is paid either monthly or yearly or on maturity. Should you invest in Indiabulls Housing Finance NCD’s of July, 2023 issue? What are the risk factors one should consider before investing in such high risk NCDs?

Also Read: Edelweiss Financial Services NCD July-2023 Review

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 – Issue details

Here are the issue details.

Opening Date 10-Jul-23
Closure date 21-Jul-23
Security Type Secured, Redeemable and Non-Convertible NCDs
Issue Size (Base) Rs 200 Crores
Issue Size (Shelf) Rs 2,000 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Minimum Lot size 10 bonds and 1 bond there after
Tenure 24, 36 and 60  months
Interest Payment frequency Monthly, annual or on maturity
Listing on Within 6 working days on BSE

These are allotted on first come first serve basis. The issue can be closed earlier if it is oversubscribed before the closure date.

NRI’s cannot apply to this NCD subscription.

Edelweiss Financial Services, Elara Capital India and Trust Investment Advisors are the lead managers for the issue.

Indiabulls Housing Finance July-23 NCD – Interest rates

As per the Indiabulls Housing Finance NCD 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. See the redemption schedule below.

Series I II III IV X VI VII VIII
Frequency of Interest Payment Annual Monthly Cumulative Annual Monthly Cumulative Annual Monthly
Tenor (in months) 24 24 24 36 36 36 60 60
Coupon (% per Annum) 9.65% 9.25% NA 9.90% 9.48% NA 10.15% 9.71%
Effective Yield (% per Annum) 9.64% 9.64% 9.65% 9.88% 9.89% 9.90% 10.14% 10.14%
Amount on Maturity (In Rs.) 1,000 1,000 1,202 * * 1,327 ** **

*StaggeredRedemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st Anniversary* until Maturity

**Five (5) annual payments of ₹200 each, starting from 1st Anniversary* until Maturity

Indiabulls Housing Finance NCD Jul-23 - Redemption Schedule of Principal payment

Indiabulls Housing Finance NCD – Credit Ratings

These NCDs have been rated as 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 regarding timely servicing of financial obligations. Such instruments carry 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 – Rs 2,165 Crores

Year ending Mar-2021 – Rs 1,201 Crores

Year ending Mar-2022 – Rs 1,177 Crores

Year ending Mar-2023 – Rs 1,129 Crores

Indiabulls Housing Finance NCD – Why to invest?

1) Indiabulls Housing Finance bonds offer attractive interest rates where investors can get interest up to 10.15% per annum.

2) It issues secured 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.

3) Company has a good credit rating of AA/Stable from CRISIL and ICRA.

Indiabulls Housing Finance NCD – Why not to invest?

1) Company profits are on declining mode.

2) Recent outbreaks of the covid-19 and lockdowns have an impact on company business. Any such outbreaks in the future cannot be predicted and can have an impact on the operations of the company.

3) Increase in NPAs can affect the business.

4) Refer prospectus for complete risk factors.

Also Read: How to create 1 Crore with 5,000 Mutual Fund SIP?

Indiabulls Housing Finance NCD – Should you invest or avoid?

Recently banks and NBFC’s have increased FD interest rates. However, Indiabulls Housing Finance NCDs still offer high interest rates and yield. Indiabulls Housing NCD rating is AA Stable by CRISIL and ICRA, which are considered as good quality rating.

On the other hand, such credit ratings can change at any time. Investors should not forget what happened in some of the companies like DHFL where NCD investor money was lost. There are also many occasions where NBFC’s have delayed the interest payment and repayment of investment amount to investors. Some of the series of the NCD’s offer repayment of capital in installments. Some argue this is good and some criticize this is bad. For me this is a biggest drawback as you invest lumpsum, but get redemption in installments.

Since these are secured NCDs, the element of risk is reduced to some extent. High risk investors can invest in these secured NCDs after considering all these risk factors.

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Suresh KP

2 comments

  1. You are reqiested to kindly advise whether additional interest rate @ 0.25% will be applicable in case of existing debenture holders as given on Page 91 and 92 of Prospectus.

    1. Kamalji

      Category I and II – Specific interest rates
      Category III and IV – Specific interest rates + 0.25%. This includes for retail investors.

      The interest rates indicated in our article are for Category III and IV including retail investors and including this 0.25%. No additional incentive available beyond what we indicated in our article.

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