InCred Financial Services has devised a secure NCD issuance that will open for applications from October 25, 2023. InCred Financial Services Limited (formerly known as KKR India Financial Services Limited) is a systemically important non-deposit-taking NBFC company in India. InCred Financial Services offers interest rates of up to 10.3%. These bonds are issued in five different series with holding periods of 18 and 36 months. Should you invest in the October 2023 issue of InCred Financial Services NCD? What are the risk factors to consider before investing in such high-risk NCDs?
About InCred Financial Services Limited
These are systemically important non-deposit-taking NBFCs registered with the RBI. The company caters to lower-middle to upper-middle class households in India for their personal financial needs, including education loans and personal loans.
Similarly, the company offers secured and unsecured business loans for small and medium enterprises, secured loans for expansion plans of K-12 Indian schools, supply chain finance, profitable financial institutions and microfinance companies. We also provide loans to small and medium-sized businesses, as well as escrow-backed loans for small and medium-sized businesses.
InCred Financial Services NCD – October 2023 issue details
| Subscription start date | October 25, 2023 |
| Subscription end date | November 7, 2023 |
| Issued securities name | InCred Financial Services Limited (Formerly known as KKR India Financial Services Limited) |
| Type of security | Safe, rated, listed, redeemable, non-convertible bonds |
| Publication size (base) | 150 million rupees |
| Publish size (option to keep beyond subscription) | 150 million rupees |
| Total issue size | 300 million rupees |
| Issue price | 1,000 rupees per deposit |
| face value | 1,000 rupees per deposit |
| series | I to V |
| minimum lot size | 10 bonds and then 1 bond |
| tenure | 18, 24, 36 months |
| Interest payment frequency | monthly, quarterly, yearly |
| Listed | Within 6 business days for BSE |
| lead manager | JM Financial Limited and Incred Capital Wealth Portfolio Managers Private Limited |
| bond trustee | Catalyst Trusteeship Limited |
NRIs are not eligible for this NCD subscription.
InCred Financial Services NCD October 2023 Prospectus
What are InCred Financial Services’ NCD interest rates?
| series | I | II | Ⅲ | Ⅳ | V |
|---|---|---|---|---|---|
| Interest payment frequency | monthly | quarterly | monthly | yearly | monthly |
| Period of employment (months) | 18 | twenty four | twenty four | 36 | 36 |
| Coupon (% per year) | 9.48% | 9.55% | 9.66% | 10.30% | 9.84% |
| Effective yield (%/year) | 9.88% | 9.88% | 10.08% | 10.28% | 10.29% |
| Amount at maturity (Rs.) | 1,000 | * | 1,000 | ** | 1,000 |
* Gradual redemption in 8 quarterly payments of ₹ 125 each from Q1 till maturity**
** 3 staged redemptions from year 1 to maturity, 1st year 333 ₹, 2nd year 333 ₹, 3rd year 334 ₹**
What is InCred Financial Services NCD’s credit rating?
These NCDs are rated CRISIL A+/Stable by CRISIL Ratings. This indicates that financial instruments with this rating are considered to be sufficiently secure with respect to timely repayment of financial obligations. The credit risk of such products is low.
How is reimbursement for Series II and Series IV NCDs?
For Series II – The principal redemption schedule, redemption amount and principal balance for Series II NCDs are set out below.
For Series IV – Below is the principal redemption schedule, redemption amount and principal balance for Series IV NCDs.
How is the company’s financial situation?
Why invest in InCred Financial Services NCD?
1) These NCDs offer attractive interest rates of up to 10.3%. Currently, banks and financial institutions are offering lower interest rates compared to these rates, so these are attractive investment options.
2) It is a secured bond. This means that if a company goes into financial trouble for any reason and closes down, NCD investors will receive priority repayment of principal and interest.
3) These NCDs come in five different series. Investors have the choice to invest in the series that suits them best.
Would you like to invest in these bonds?
The risk factors for investing in these bonds are:
1) Our customers may default on their repayment obligations, which could adversely affect our business.
2) An increase in the level of NPAs in our AUM, for any reason, could have an adverse impact on our business.
3) The loan book consists of unsecured loans. Failure to timely collect amounts due from customers in connection with such loans could have an adverse effect on the Company’s operations and profitability.
4) If a company’s credit rating is downgraded, interest rates for new borrowings and refinancing of outstanding debt may increase, which increases financing costs and reduces future debt issuance and competitive borrowing. performance may be adversely affected.
5) Credit ratings do not reflect all risks. If NCD’s credit rating is downgraded, it could have an adverse effect on NCD’s value and, as a result, its ability to raise additional debt.
6) Please refer to the NCD prospectus for complete risk factors.
How do I purchase InCred Financial Services NCDs?
These are issued only in demat format. You can log in to your demat and trading account, check the NCD link, select the InCred Financial Services NCD symbol, enter your investment amount and submit.
Should you invest in the October 2023 issue of InCred Financial Services NCD?
InCred Financial NCD offers high interest rates of up to 10.3%. Currently, banks and financial institutions are offering lower interest rates compared to such rates, so these will definitely attract investors. These are secure NCDs. This means that if a company goes into financial trouble or ceases operations for any reason, investors will have priority in interest payments and capital repayments. These NCDs are rated A+/Stable by CRISIL Ratings, which is considered a good rating.
On the other hand, there are also risk factors associated with investing in such NCDs. The redemption process for Series II and IV is done in stages rather than all at once.
Also, investing in FDs of NBFC companies has become riskier. In the past, NBFC companies have defaulted on his NCD payments and in some cases, interest payments of NCD investors have been delayed several times in the past.
Investors who understand all these risk factors can invest in these NCDs.
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Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be contacted at suresh@myinvestmentideas.com.
