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DHFL NCD May 2018 offer review

Published on Friday, May 18, 2018 by Dilip Davda

DHFL NCD May 2018 offer review

Dewan Housing Finance Corporation Ltd. (DHLF), is a deposit-taking housing finance company registered with the NHB and focused on providing financing products for the LMI segment in India primarily in Tier II and Tier III cities and towns. It has been active in the housing finance sector in India since 1984. DHFL provides secured finance primarily to individuals, partnership firms and companies for the purchase, self-construction, improvement and extension of homes, new and resalable flats, commercial properties and land. It also provides certain categories of non-housing loans, asset management services, mutual fund products and insurance products. It has a robust marketing and distribution network, with a presence across 347 locations including 187 branches, 135 micro branches, 20 zonal/ regional / CPU offices, two disbursement hubs, one collection center, one Corporate office and One National office, as at March 31, 2018. In addition to it's network within India, DHFL has international representative offices located in London and Dubai. To broaden its customer base and to penetrate further geographically, it has entered into tie-up with a public sector bank.

DHFL visited debt market in August 2016 with two NCD issues of Rs. 1000 crore and Rs. 2000 crore and mobilized Rs. 4000 cr. and Rs. 10000 cr. respectively expressing huge demand for its debt instruments. It is once again coming with a mega NCD offer now. The company is offering Secured redeemable non-convertible debentures of Rs. 1000 each to mobilize Rs. 3000 crore under Tranche I with a green shoe option for retaining Rs. 9000 crore worth additional amount, making the total issue size of Rs. 12000 crore. It offers coupon rates ranging from 8.56% to 9.10% with monthly/ annual interest payment modes as per the choice of investors. These NCDs have tenure of 3, 5, 7 and 10 years. Minimum investment is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Retail investors can invest maximum upto Rs. 10 lakh. Issue opens for subscriptionon 22.05.18 and will close on or before 04.06.18. Company is going to allot these instruments on first come, first serve basis. Although application can be made for allotment in demat or physical mode, trading will take place only in demat mode. Post allotment, instruments will be listed on BSE and NSE. Funds raised through this offer will be used for onward lending, financing and repayment/prepayment of high cost debts.

Company is offering additional 1% loyalty interest to all original allottees who will continue the scheme till maturity selected. Over and above this, an additional interest of 0.10% is being offered to Senior Citizens. These instruments are rated CARE AAA/Stable by CARE and BWR AAA/Stable by Brickwork. Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations.

For the first time, these instruments are going to provide floating rate of interest for interest sensitive investors. It will be linked to overnight Benchmark MIBOR+ fixed spread of 2.16%. These instruments will be under Series VII NCDs and will have tenure of 3 years only with annual interest payment mode. Investors have option for nomination facility too.

As at March 31, 2016, March 31, 2017 and March 31, 2018, DHFL's loan book stood at Rs. 61,77,502 lakh, Rs. 72,09,618 lakh and Rs.91,93,232 lakh, respectively and it's assets under management were Rs. 69,52,388 lakh, Rs. 83,55,992 lakh and Rs. 1,11,08,583 lakh, respectively. As at March 31, 2016, March 31, 2017 and March 31, 2018 its gross NPAs as a percentage of loan book was 0.93%, 0.94% and 0.96%, respectively and net NPAs was 0.58%, 0.58% and 0.56%, respectively.

For the Fiscals 2016, 2017 and 2018, its total revenue from operations was Rs. 7,29,510 lakh, Rs. 8,85,176 lakh and Rs. 10,45,016 lakh, respectively on a standalone basis and Rs. 7,83,487 lakh, Rs. 9,60,990 lakh and Rs. 10,51,474 lakh, respectively on a consolidated basis. Profit after tax for these Fiscals was Rs . 74,930 lakh, Rs. 2,80,630 lakh and Rs. 1,16,565 lakh, respectively on a consolidated basis and Rs. 72,920 lakh, Rs. 2,89,645 lakh and Rs. 1,17,213 lakh, respectively on a standalone basis. DHFL's consolidated revenue from operations and profit after tax grew at a CAGR of 15.8% and 24.7%, respectively, over the last three Fiscals.

Lead managers to this offer are Yes Securities (India) Ltd., Edelweiss Financial Services Ltd., A K Capital Services Ltd., Axis Bank Ltd., Green Bridge Capital Advisory Pvt. Ltd., ICICI Bank Ltd., ICICI Securities Ltd., IIFL Holdings Ltd., IndusInd Bank Ltd., SBI Capital Markets Ltd. and Trust Investment Advisors Pvt. Ltd. Catalyst Trusteeship Ltd. is the debenture trustee and Karvy Computershare Pvt. Ltd. is the registrar to the issue.

Conclusion: Investors looking for fixed interest income may select investment in this high rated attractive debt offer.


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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. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. 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, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.


User Comment

7. ashoke mukhopadhyay  Jul 29, 2018 12:19 Reply
Record date of coupon payment monthly & yrly
6. Chirag Shah  Jun 2, 2018 14:56 Reply
How and Where to check allotment status ?

My DEMAT account debited.
5. Ashoke  May 26, 2018 15:05 Reply
Dhfl ncd is fully subscribed or still balace to purchase from primary market
4. Ashoke  May 24, 2018 20:25 Reply
Dhfl ncd day 2 subscription. Please
3. yogesh kum  May 22, 2018 16:50 Reply
how to apply online???
3.1. Ashoke  May 22, 2018 17:54
Day 1 subscription of dhfl may 18 ncd
2. Saptus  May 20, 2018 18:58 Reply
Excellent review of the NCD issue. It is not clear whether the 1% loyalty bonus is for all retail subscribers to the issue. there is a talk that the loyalty bonus is only for tenors of 5,7 and 10 years only and the bonus is 0.50, 0.7% and 1% respectively.
Also the additional interest of 0.1% for senior citizens: will it be applicable for those applying online as there is no provision to indicate the status or a box where the date of birth can be written. The facility is available in physical application form.
Can you clarify and guide us please.
Thanks in advance
2.1. RC  May 21, 2018 22:17
If u apply online, it will automatically apply for Senior Citizen.
1. Sudha  May 19, 2018 18:46 Reply
contact for investment in ncd



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