Posted on Wednesday, December 21, 2016
Reliance Home Finance Ltd (RHFL) is a wholly owned subsidiary of Reliance Capital Ltd and is engaged in lower middle and middle income group housing finance segment. It is registered with National Housing Bank (NHB).
For the purpose of onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company, it is coming out with a maiden NCDs (of Rs. 1000 each) issue of Rs. 3500 crore shelf limit. The base amount is Rs. 1000 crore Secured NCDs and the green shoe option is Rs. 2000 crore for secured NCDs and Rs. 500 crore for Un-Secured NCDs. Quota reserved for QIBs (30%), Corporate (10%), HNIs (30%) and Retail (30%). The company offers coupon rates ranging from 8.70 per cent to 9.15 per cent depending upon tenure of 3, 5 and 10 yrs. For 15 years NCDs it will offer 0.25 step-up incentives in absence of call option after 10 years term that will be under unsecured category. Secured NCDs does not have Step-Up/Step-Down options. NCDs are available in demat and physical mode, however, trading will take place only in demat mode. Minimum application is to be made for 10 NCDs (Rs. 10000) and in multiple of 1 NCD thereon, thereafter. Interest will be paid on Annual basis for all options. Issue opens for subscription on 22.12.16 and will close on or before January 06, 2017. Post allotment, NCDs will be listed on BSE and NSE.
Secured NCDs up to Rs. 3000 crore is graded AA+/Stable by CARE and BWR and Un-Secured NCDs up to Rs. 500 crore is graded AA/Stable by CARE and BWR (indicating that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk) Lead managers to the issue are Edelweiss Financial Services Ltd, A K Capital Sercvices Ltd, Axis Bank Ltd., Trust Investment Advisors Pvt Ltd and Yes Securities (India) Ltd. IDBI Trusteeship Services Ltd is the Debenture Trustee and Karvy Computershare Pvt Ltd is the registrar to the issue.
Housing Finance sector is expected to show CAGR of around 18-20 per cent till 2020 and RHFL that has shown CAGR of 24 per cent plus for revenues and CAGR of 36 per cent for profit before tax is hopeful of maintaining the same. It has NPA around 1.2 per cent and is doing a business with a spread of around 3.7 per cent. As at 30.09.16, RHFL had AUM of Rs. 9383 crore spread at 100 locations through 43 branches.
Conclusion: Offers with "AA+/AA" ratings is preferred by investors in debt market. Hence this offer is worth considering for investment for steady interest income.
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. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. 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.
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