Indiabulls Housing Finance Limited is coming up with NCD issue which would open for subscription on 7th October, 2022. In this Tranche-III NCD issue, it is coming up with secured NCD bonds now. 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 9.55%. 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 NCDโs of October, 2022 issue? What are the risk factors one should consider before investing in such high risk NCDs?
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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
| Opening Date | 07-Oct-22 |
| Closure date | 28-Oct-22 |
| Security Type | Secured, Redeemable and Converted NCDs |
| Issue Size (Base) | Rs 800 Crores |
| Issue Size (Shelf) | Rs 1,400 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 |
| Series | Series I to VII |
| Interest Payment frequency | Monthly, Yearly and Cumulative |
| Listing on | Within 6 working days on BSE/NSE |
These are allotted on first come first serve basis. The issue can be closed earlier if it is oversubscribed before the closure date.
NRIโs cannot apply to this NCD subscription.
The base issue size of Oct-2022 NCD issue is Rs 100 Crores with an option to retain over subscription up to Rs 700 Crores totaling to Rs 800 Crores.
Edelweiss Financial Services, AK Capital Services, IIFL Securities and Trust Investment Advisors are the lead managers for the issue.
Indiabulls Housing Finance 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).
| Series | Interest Payment | Tenor Months | Coupon Rate (Retail) | Effective Yield (% p.a.) | Amount on Maturity (Rs) |
|---|---|---|---|---|---|
| I | Annual | 24 | 9.05% | 9.04% | 1,000 |
| II | Cumulative | 24 | NA% | 9.05% | 1,189 |
| III | Monthly | 24 | 8.70% | 9.04% | 1,000 |
| IV | Annual | 36 | 9.30% | 9.29% | 1,000 |
| V | Cumulative | 36 | NA | 9.30% | 1,306 |
| VI | Monthly | 36 | 8.94% | 9.31% | 1,000 |
| VII | Annual | 60 | 9.55% | 9.54% | 1,000 |
| VIII | Monthly | 60 | 9.15% | 9.54% | 1,000 |
Indiabulls Housing Finance NCD โ 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 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
Indiabulls Housing Finance NCD – Why to invest?
1) Indiabulls Housing Finance bonds offer attractive interest rates where investors can get interest up to 9.55% 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 from CRISIL and ICRA. However, the interest rates offered are low compared to Edelweiss Finance NCD that is offering 10% interest rates though both are rated as AA rating
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.
How to subscribe to these NCDs?
This issue is available in only in demat form. You can login to your demat account, check for NCD section and look for these NCD links and apply for the same. For more information on this you can refer prospectus.
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Indiabulls Housing Finance NCD โ Should you invest or avoid?
Currently banks and NBFC companies are offering low interest rates, hence Indiabulls Housing Finance NCD interest rates would be tempting. Indiabulls Housing NCD rating is AA by CRISIL and ICRA, which are considered as good 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.
Since these are secured NCDs, the element of risk is reduced to some extent. High risk investors can invest in these secured NCDs.
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Sir,
Since there are so many NCD issues with almost similar ratings (broadly with AA rating with sub-category as stable or negative) and every body is offering different interest rates, therefore it is requested to kindly give your considered and valuable advise as to which NCD one should apply for looking at safety but at the same time optimized interest rate also.
Every NCD has its own pros and cons. I always recommend investing in AA / AAA rated NCDs.