Updated: September 5, 2023
Indiables Housing Finance Limited plans to issue a secured NCD bond that will open for sale on the 6th.th September 2023. Indiabulls Housing Finance Limited is one of India’s leading Home Finance Companies (HFCs) in terms of balance under management. Indiabulls Housing Finance NCD’s NCD interest rate is up to 10.75%. These NCDs have terms of 24 to 120 months. Interest is paid monthly, annually, or at maturity. Should you invest in the September 2023 issue of Indiables Housing Finance NCD? What are the risk factors to consider before investing in such high-risk NCDs?
About Indiables Housing Finance Limited
The company is one of the largest Indian Home Finance Companies (HFCs) in terms of assets under management. These are NHB registered non-deposit HFCs.
The Company is primarily focused on long-term secured loans. The majority of the loan book consists of secured loans. The Company primarily provides mortgages and real estate secured loans to targeted customer segments such as salaried workers, self-employed individuals and small and medium enterprises. We also provide mortgage loans in the form of commercial lease discounts and construction loans for residential construction to property developers in India.
Indiables Mortgage NCD – Issue Details
Here are the details of the problem:
| Subscription start date | September 6, 23 |
| subscription end date | September 20, 2023 |
| Issued security name | Indiables Housing Finance Limited |
| Security type | Safe, Redeemable and Non-Redeemable NCDs |
| issue size (base) | 100 million rupees |
| Publish size (option to keep beyond subscription) | 100 million rupees |
| total issue size | 200 million rupees |
| issue price | 1,000 rupees per security deposit |
| face value | 1,000 rupees per security deposit |
| series | I-XII |
| Minimum lot size | 10 bonds and then 1 bond |
| tenure | 24-96 months |
| Interest payment frequency | Monthly, Yearly, Cumulative |
| listing | Within 6 business days for BSE |
| chief manager | Nuvama Wealth Management, Elara Capital India, Trust Investment Advisors |
| bond trustee | IDBI Trusteeship Services Limited |
*Distribution will be on a first-come, first-served basis. An issue may be closed early if it is flooded with bookings before the end date.
Indiables Mortgage Sept 23 NCD – Rates
according to Indiables Mortgage NCD September 23 Prospectus The interest rates for Indiables Housing Finance for Category III and IV investors (including individual investors) as filed with SEBI are as follows: Investors should be aware that principal is repaid in installments in her NCDs for a specific holding period, and this is the biggest drawback of these his NCDs. See comments on redemption schedule below table.
| series | I | Ⅱ | Ⅲ | Ⅳ | V. | VI | VII | VIII | IX | X | XI | XII |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest payment frequency | a year | monthly | Cumulative | a year | monthly | Cumulative | a year | monthly | a year | monthly | a year | monthly |
| Tenure (months) | twenty four | twenty four | twenty four | 36 | 36 | 36 | 60 | 60 | 84 | 84 | 120 | 120 |
| Coupon (%/Year) – III and IV Investors | 9.65% | 9.25% | NAMore | 9.90% | 9.48% | NAMore | 10.15% | 9.71% | 10.50% | 10.03% | 10.75% | 10.25% |
| Effective Yield (%/Year) – III and IV Investors | 9.64% | 9.64% | 9.65% | 9.88% | 9.89% | 9.90% | 10.14% | 10.14% | 10.49% | 10.49% | 10.74% | 10.74% |
| Amount at maturity (Rs.) | 1,000 | 1,000 | 1,202 | * | * | 1,328 | ** | ** | *** | *** | **** | **** |
*From the first year* to maturity, three phased redemptions: 333.33 yen in the 1st year, 333.33 yen in the 2nd year, and 333.33 yen in the 3rd year
** Phased redemption in 5 annual payments of ₹200 each from 1st Anniversary* until maturity
***Staggered redemption in 7 annual payments of ₹142.86 each from 1st anniversary* to maturity
**** Phased redemption with 10 annual payments of ₹100 each from 1st anniversary* until maturity
Indiables Mortgage 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 offer the highest degree of security with respect to timely repayment of financial obligations. The credit risk of such instruments is very low.
What about company profits?
Here is the breakdown of the company’s consolidated profit.
- Year ended March 2020 – Rs 2,165 million
- Year ending March 2021 – INR 1,210 crore
- Year ending March 2022 – INR 117.7 billion
- Year ending March 2023 – INR 112.9 billion
Indiables Home Finance NCD – Why invest?
- Indiables Housing Finance Bonds offer attractive interest rates, allowing investors to earn up to 10.75% interest annually.
- Issue a secure NCD. Secured NCDs are safer than non-secured NCDs. In the event of a company liquidation/closure for any reason, safe NCD investors can preferentially repay their capital along with interest as backed by the company’s assets. Therefore, it is safe to invest in such a secure NCD option.
- The company has a good AA/Stable credit rating from CRISIL and ICRA.
Indiables Home Finance NCD – Why not invest?
- Company profits are declining.
- The recent COVID-19 outbreak and lockdowns have impacted businesses. The occurrence of such infections in the future is unpredictable and may affect the Company’s operations.
- An increase in NPA can impact your business.
- See prospectus for full risk factors.
Indiables Mortgage NCD – Invest or Avoid?
- Banks and NBFCs have recently raised FD interest rates. However, Indiabulls Housing Finance NCD still offers high interest rates and yields. The Indiables Housing NCD Rating is AA Stable and considered a good quality rating by CRISIL and ICRA.
- However, these credit ratings are subject to change at any time. Investors should not forget what happened with some companies like DHFL where NCD investors lost their money. There have also been numerous cases of NBFCs delaying interest payments to investors and repaying their investments. Some series of NCDs also offer capital installments. Some argue that this is good, others criticize that this is bad. For me, this is the biggest drawback as it is a lump sum investment but pays off in installments.
- These are safe NCDs, so the risk factor is mitigated to some extent. High-risk investors can invest in these safe NCDs after considering all these risk factors.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and he is a NISM Certified – Research Analyst. I have been analyzing financial markets for the past 20 years. You can contact me at suresh@myinvestmentideas.com.
