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DHFCL NCD offer review - Aug 2016

Posted on Sunday, August 28, 2016

DHFCL NCD offer review - Aug 2016

Dewan Housing Finance Corp. Ltd. (DHFCL) that entered with its maiden debt offer of Rs. 4000 crore on 3rd August 2016 and garnered above Rs. 19K crore has mulled hitting the iron when it is hot. Encouraged by the overwhelming support for earlier debt offer, the company is now coming out with even bigger pie of Rs. 10000 crore debt offer on aggregate basis. The base size of the offer is Rs. 2000 crore with a permission to retain oversubscription to the tune of Rs. 10000 crore. Issue opens for subscription on 29.08.16 and will close on or before 12.09.16. Allotment will be done on “First Come-First Served basis”.

The company is offering Secured Non Convertible Debentures of Rs. 1000 each. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD thereon, thereafter. The issue is rated as AAA by CARE and BWR indicating that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry the lowest credit risk. Post this issue its debt equity ratio will rise to 13.35. This time the offer has little lower coupon rates and varied tenures as detailed hereunder:

In Series I, the tenor is 3 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.10%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.10%.

In Series II, the tenor is 5 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.15%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.15%.

In Series III, the tenor is 7 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.25%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.25%.

[Category IV Investors (Retail Individual Investors) are defined as Resident Indian individuals and HUFs through the Karta applying for an amount aggregating for an amount up to and including Rs. 10 lakh, across all Series of NCDs. Category III Investors (High Net-worth Individuals or HNIs) Investors are Resident Indian individuals and HUFs through the Karta applying for an amount above Rs. 10 lakh, across all Series of NCDs]. Although allotment is available in demat as well as physical mode, trading will take place in demat mode only. Post allotment, NCDs will be listed on BSE and NSE.

The Lead Managers to the Issue are YES Securities (India) Limited , Edelweiss Financial Services Limited, Axis Bank Limited, A. K. Capital Services Limited, ICICI Bank Limited, IndusInd Bank Limited, IIFL Holdings Limited, SBI Capital Markets Limited and Trust Investment Advisors Private Limited. Catalyst Trusteeship Ltd is the Debenture Trustee and Karvy Computershare Pvt Ltd is the registrar to the issue.

Conclusion: Offers with “AAA” rating is most preferred by investors in debt market. Hence this offer is worth considering for investment for steady interest income.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

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About Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda (SEBI registered Research Analyst-Mumbai), a freelance journalist for more than 25 years, is a stock market analyst and news article writer. Since 1985, he has contributed to print media, electronic media and often appears on TV channels as visiting stock analyst. His articles are regularly publishes in Smart Investment (English and Gujarati weekly published from Ahmedabad), Free Press Journal and many other news papers & magazines. He is also a visiting stock analyst on DD News TV Channel.

Email: dilip_davda@rediffmail.com


User Comment

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2. BASSANT DALMMIA  Sep 15, 2016 12:39:30 PM IST Reply
DHFL TRANCH 2 LISTING WAS VERY POOR ITS CURRENTLY QOUTING AT 987 UNDER THE ISSUE PRICE FEEL CHEATED
avatar
1. BASSANT DALMMIA  Sep 15, 2016 12:36:32 PM IST Reply
DHFL TRANCH 2 LISTING WAS VERY POOR ITS CURRENTLY QOUTING AT 987 UNDER THE ISSUE PRICE FEEL CHEATED
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