Indiabulls Housing Finance NCD – Sep 2021 – Review
Indiabulls Housing Finance NCD issue would open for subscription on 6th September 2021. In this Tranche-I NCD issue, it is coming up with both, secured and unsecured 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 9.25% and yield is up to 9.75%. These NCDs have tenure of 24 months to 87 months. These interests are paid either monthly or yearly or on maturity. Should you invest in Indiabulls Housing Finance NCD September 2021? 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 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 – Sep 2021
NCD subscription opens on 6th September 2021 (Monday) and closes on 20th September 2021 (Monday).
NCD’s are available in 10 different options. It offers NCDs for 24 months, 36 months, 60 months and 87 months tenure.
Coupon interest rates for Category III and IV investors (including Retail investors) are between 8.42% to 9.75%. Yield on these NCD bonds works out up to 9.75% which is highest.
It offers both secured NCDs and unsecured NCDs. Secured NCDs are offered for 24 months to 60 months tenure and unsecured NCDs for 87 months tenure.
Interest is payable monthly or yearly or on maturity depending on the option chosen by the NCD investor.
The face value of the NCD bond is Rs 1000.
Investors need to do minimum investment of 10 bonds / Rs 10,000. Beyond this one can invest in multiples of 1 bond.
These NCD bonds would be listed on NSE and BSE within 6 working days from the issue closure date. Hence these are somewhat liquid investments.
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.
The base issue size is Rs 200 Crores with an option to retain over subscription up to Rs 800 Crores totaling to Rs 1,000 Crores.
Edelweiss Financial Services, IIFL Securities and Trust Investment Services are the lead managers for the issue.
Indiabulls Housing Finance Sep-2021 NCD Tranche-I Prospectus
Interest rates of Indiabulls Housing Finance September 2021 NCD
Here are the Indiabulls Housing Finance interest rates for Category III and IV investors (including retail investors).
What are Indiabulls Housing Finance NCD rating?
These NCDs have been rated as CRISIL AA / Stable by CRISIL Ratings and BWR AA + Negative by Brickworks Ratings. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
How is the company doing in terms of profits?
Here are the details of profits of the company.
Year ending Mar-2019 – Rs 4,057.7 Crores
Year ending Mar-2020 – Rs 2,1659 Crores
Year ending Mar-2021 – Rs 1,201.5 Crores
Why to invest in these NCDs?
1) These Indiabulls Housing Finance bonds offer attractive interest rates where investors can get interest up to 9.75% per annum.
2) It issues both secured NCDs and unsecured 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 good credit rating of AA from CRISIL Ratings and Brickworks Ratings.
Why not to invest in these NCDs?
1) Company profits are on declining mode. Generally, companies would be able to make interest payments majorly from the profits of the company. If there is decline in profits in future, company might delay interest payments.
2) Recent outbreaks of the covid-19 have impact on company business. Any such outbreaks in future cannot be predicted and can have impact in the operations of the company.
3) Increase in NPAs can affect the business.
4) Refer prospectus for complete risk factors.
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How to subscribe to these NCDs?
This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.
Should you invest in Indiabulls Housing Finance NCD 2021?
Indiabulls Housing Finance NCD offer high interest rates. Banks are offering low interest rates, hence investors would get tempted with such NCDs. Indiabulls Housing NCD rating is AA by CRISIL Ratings and Brickworks Ratings which are considered as good rating. However, such credit ratings can further fall in future. High risk investors can invest in these bonds preferably in secured NCDs and avoid unsecured NCDs.
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The additional incentive will be given maximum of 0.25% p.a. for Category III and IV Investors in the proposed Issue, only on the Indiabulls NCDs allotted in this Issue i.e. to the Primary Holder(s) on the deemed date of allotment. is it only for existing investor for Category III and IV or for new investors also?
For every one.
Dear Suresh KP – Request you to please make a blog on how to invest in such NCD
Aakash, There is no big process about investing in NCD. Just login to your demat account and head to NFO/IPO/Bonds section and invest it
Dear Sureshji, Detailed analysis done by you for each & every post. Really appreciated your interest on money market securities. I would like to ask whether the interest accrued on NCDs are taxable, if so how it is calculated?
Thanks Ragavan. Interest amount is taxable based on the individual tax slab applicable. One can follow based on actual receipt basis (if paid monthly or yearly, they can show in the financial year return, however if it is paid ony on maturity, one can show as and when it is received). These are generally treated like any other bank FD interest taxation principles
These rates are quite good. How do you compare these NCDs with corporate FDs like Shriram City in terms of Safety and Security?
Varghese, I don’t compare as these are NCD bonds (secured NCDs) vs corporate FDs where there is no security. It would not be apple to apple comparison
Good and detailed analysis. Simple thing of life is that if you want better rated NCDs (means more security), then you will get less interest rate and vice versa. Safety scores better than returns. Because if there is no safety (means principal is liquidated), there is no return at all. Safety hai to return hai.
Ha ha. Good comments Kamal ji