11.19% Navi Finserv NCD Feb-2024 – Details, Interest Rates and Review

Navi Finserv is coming up with secured NCD bonds now. These bonds would open for subscription on February 26, 2024. Navi Finserv is a non-deposit taking, systemically important NBFC registered with RBI. The interest rates for Navi Finserv NCD are up to 11.19%. These NCDs are offered for 18 months, 27 months and 36 months tenure. Interest is paid either monthly or yearly. Should you invest in Navi Finserv NCD February, 2024? Is Investment in Navi Finserv NCD Safe or risky?

About Navi Finserv Limited

Company is a non-deposit taking, systemically important NBFC registered with RBI and wholly owned subsidiary of NTL.

NTL is a technology driven financial products and services company in India focussing on digitally connected young middle-class population in India.

Company offer lending products like personal loans, home loans under the Navi brand.

It also offer microfinance loans under the brand name “chaitanya” through its subsidiary, CIFCPL

Navi Finserv NCD Feb-2024 issue details

Here are the details of Navi Finserv NCD Feb-2024 issue.

Subscription opening Date 26-Feb-24
Subscription closure Date 07-Mar-24
Issuing Security Name Navi Finserv Limited
Security Type Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base) Rs 300 Crores
Issue Size (Option to retain over subscription) Rs 300 Crores
Total issue size Rs 600 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 18, 27 and 36 months
Interest Payment frequency Monthly and Annually
Listing on Within 6 working days on BSE/NSE
Lead Manager JM Financial Limited
Debenture Trustee/s Catalyst Trusteeship Limited

NRI’s cannot apply to this NCD subscription.

Navi Finserv NCD Interest Rates – Feb-2024 Issue

Series I II III IV X
Frequency of Interest Payment Monthly Monthly Annual Monthly Annual
Tenor (in months) 18 27 27 36 36
Coupon (% per Annum) 10.00% 10.40% 10.90% 10.65% 11.19%
Effective Yield (% per Annum) 10.47% 10.91% 10.94% 11.19% 11.19%
Amount on Maturity (In Rs.) 1,000 1,000 1,000 1,000 1,000

What are the credit ratings for these NCDs?

CRISIL Ratings assigned Navi Finserv NCD rating as CRISIL A/Stable. Instruments with this rating are considered to have adequate 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 restated consolidated profits of the company.

  • FY2021 – Rs 118.1 Crores
  • FY2022 – Rs 14.66 Crores (Loss)
  • FY2023 – Rs 264.1 Crores

Why to invest in these NCDs?

  • Navi Finserv NCD’s offer attractive interest rates where investors can get interest up to 11.19%.
  • It issues secured NCDs. Its 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.

Why not to invest in these NCD Bonds?

Here are the risk factors investors should consider before investing in these bonds.

  • Company has incurred losses for FY22. Investors should always invest in profit making companies so that they can get timely payment of interest and repayment of capital.
  • Company lending business of and micro finance business operations rely intensively on substantial capital for its lending and microfinance business operations. Any disruption can affect company financial condition and liquidity
  • Company is affected by volatility in interest rates in both lending and treasury operations which could cause its net interest income to varry and affect its profitability.
  • Company has significant growth in recent period and may not be able to grow at similar pace in future or manage it effectively.
  • Customers default in repayment obligations can adversely affect company.
  • Covid pandemic has affeced its regular business operations and may continue in fuure too.
  • Refer Navi Finserv Feb-24 NCD prospectus for complete risk factors.

How safe is Navi Finserv NCD Bonds?

These NCD bonds are rated as A/Stable by Crisil Ratings. Such ratings are considered to have adequate safety regarding timely servicing of financial obligations with low credit risk. Hence these are safe bonds.

Should you invest in Navi Finserv NCD Feb-2024 issue?

  • These NCD Bonds offer high interest rates and yield. Such interest rates are higher than FD rates offered by small finance bank too. It comes with A/Stable credit ratings which are considered to have adequate safety and carry low credit risk. These are secured NCDs too.
  • On the other side investment in these bonds comes with several risk factors. Company credit ratings can change in future without any advance intimation. Company has incurred losses for FY22, however shown significant improvement both in terms of revenue and margins.

Investors who understand all these risk factors can invest in such NCDs.

Suresh KP

2 comments

  1. dear Sureshji, thks for the excellent analysis !
    but I am observing that the fintechs are competing to garner funds with higher & higher interest rates. what could be the reasons for their confidence about its sustainability ?
    Tom

    1. Hello Thomas, Banks are already offering high interest rates, hence NBFC’s are offering extra interest rates to attract investors. These are high risk as deposit insurance is also not applicable to them.

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