Indiables Commercial Credit Limited is about to issue a secured NCD bond that will begin offering on the 3rd.rd April 2023. Indiabulls Commercial Credit Limited is a non-deposit NBFC company and a subsidiary of Indiabulls Housing Finance Limited. NCD interest rate for Indiabulls Commercial Credit NCD is up to 10.5%. These NCDs have tenures of 24 to 60 months. Interest is paid monthly or annually or at maturity. These NCDs have a big downside and I’m sure no financial website will cover this as usual. Should I invest in Indiabulls Commercial Credit NCD April 2023? What are the risk factors to consider before investing in such high-risk NCDs?
About Indiables Commercial Credit Limited
Delhi-based Indiabulls Commercial Credit Limited is a non-deposit NBFC. He is a wholly owned subsidiary of Indiabulls Housing Finance Limited, one of India’s largest housing finance companies.
The company’s primary focus is long-term secured mortgages. The company’s products can be classified as follows:
- Retail mortgages for self-employed, sole proprietors and small businesses
- Corporate Mortgage Loans to Residential Project Developers
Indiabulls Commercial Credit NCD April 2023 – Issue Details
Here are the details of the problem.
| Opening date | April 3, 23 |
| closing day | April 19, 23 |
| Type of security | Protected, redeemable, non-exchangeable NCDs |
| issue size (base) | 200 million rupees |
| Issue size (oversubscription) | Rs 800 cror |
| total issue size | 1,000 rupees |
| issue price | Rs 1,000 per bond |
| face value | Rs 1,000 per bond |
| Minimum lot size | 10 bonds and then 1 bond |
| term of office | 24-60 months |
| Interest payment frequency | Monthly, Yearly, At Maturity |
| listing | Within 6 business days for BSE/NSE |
What is the staggered redemption of these NCDs?
These are unique NCDs. These NCDs do not have maturity dates like other NCDs. These NCDs have the concept of staggered redemption. Each NCD is divided into 3 or 5 parts.
What are the three phased redemptions? – Three staggered redemptions from year 1 to INR 333 for the first year, INR 333 for the second year and INR 334 for the third yearst Anniversary** Until maturity
What is a 5-step gradual redemption? – 5 annual payments of INR 200 each, starting from 1st Anniversary** Until maturity
Indiabulls Commercial Credit NCD – Interest Rate
according to Indiabulls Commercial Credit April 2023 NCD Prospectus Interest rates for Indiabulls Commercial Credit for Category III and IV investors (including private investors) as filed with SEBI are as follows:
| Series –> | I | Ⅱ | Ⅲ | Ⅳ | X | Ⅵ | VII | VIII |
|---|---|---|---|---|---|---|---|---|
| Interest payment frequency | a year | monthly | Cumulative | a year | monthly | Cumulative | a year | monthly |
| Duration (months) | twenty four | twenty four | twenty four | 36 | 36 | 36 | 60 | 60 |
| Coupon (annual rate) | 10.00% | 9.57% | NAMore | 10.28% | 9.80% | NAMore | 10.50% | 10.03% |
| Effective yield (%/year) | 9.98% | 9.99% | 10.00% | 10.23% | 10.24% | 10.25% | 10.49% | 10.50% |
| Maturity (Rs.) | 1,000 | 1,000 | 1,201 | Chidori* | Chidori* | 1,322 | Chidori** | Chidori** |
*From Year 1* to Maturity, staggered redemption in 3 annual payments of INR 333 for 1st year, INR 333 for 2nd year and INR 334 for 3rd year
** Phased redemption in 5 annual payments of INR 200 each from 1st anniversary* until maturity
Indiabulls Commercial Credit NCD – Credit Rating
These NCDs are rated CRISIL AA / Stable by CRISIL Ratings and ICRA AA Stable by ICRA. Products with this rating are considered to have the highest degree of security with respect to timely servicing of financial obligations. The credit risk of such financial instruments is very low.
What are the company’s profits?
Click here for details of consolidated financial statements.
Year ending March 2020 – Rs 19.8 Crores
Year ending March 2021 – Rs 139 Crores
Year ending March 2022 – Rs 508.2 Crores
Indiabulls Commercial Credit NCD – Why invest?
1) Indiabulls commercial credit bonds offer attractive interest rates, allowing investors to earn interest up to 10.5% per annum.
2) Issue a secure NCD. A protected NCD is more secure than an unprotected NCD. If the company is liquidated/closed for any reason, a safe NCD investor will prioritize repayment of capital along with interest as backed by the company’s assets. Hence investing in such safe NCD options is safe to do.
3) The company has a good AA/Stable credit rating from CRISIL and ICRA.
Indiabulls Commercial Credit NCD – Why not invest?
1) High customer default rates, resulting in increased NPAs, which can impact a company’s business.
2) The recent covid-19 outbreak and lockdown has impacted the company’s business. Such occurrences in the future are unpredictable and may affect the Company’s operations.
3) Investing in NCD bonds of NBFC companies will always be risky as some NBFC companies have defaulted or delayed the payment of investor funds early.
4) See prospectus for full risk factors.
Indiabulls Commercial Credit NCD – Should You Invest Or Avoid?
Banks and NBFC recently raised FD interest rates. However, Indiabulls Commercial Credit NCD still offers high interest rates and yields. These NCD ratings are AA Stable by CRISIL and ICRA and are considered good credit ratings.
On the other hand, some series of these NCDs have principal repayment in 3 or 5 installments. Investors are interested in investing a small amount and receiving a lump sum, but not in a lump sum and receiving capital in installments.
High-risk investors who understand all the risk factors of investing in NBFC companies can invest in these NCDs to invest in non-staggered series.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years.
