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Dhani Loans NCD Jan 2022 issue review (Avoid)

Dhani Loans and Services Limited Logo
  • This is the fourth debt offer from this company since February 2019.
  • The company has changed its name from Indiabulls Consumer to Dhani Loans.
  • For this issue set of Lead Manager, Debenture Trustee and Rating agencies are changed.
  • There is no harm in ignoring this risky debt offer.

ABOUT COMPANY:
Dhani Loans & Services Ltd. (DLSL) (erstwhile known as Indiabulls Consumer Finance Ltd.) is a non-deposit taking systemically important NBFC registered with the RBI and a 100% subsidiary of Dhani Services Limited (formerly Indiabulls Ventures Limited), a listed Indian company.

It provides transaction finance to customers through an array of product offerings on the Dhani App and also provides personal loans, secured and unsecured business loans to individuals and corporates.

On the financial services front, customers can use the Dhani App to choose from a suite of products to help manage their financial needs on a daily basis. This includes managing all payments through the "Dhani Card" or "Dhani Wallet"; and access to personal finance through "Dhani Credit Line", for securing customers and their families with personal and medical insurance, and for stockbroking solutions.

As of September 30, 2021, the Company has 133 branches and has disbursed loans to customers in over 900 cities in India through the Dhani App, enabling us to operate on a Pan-India basis. Further, our Company has over 14,000 employees as of September 30, 2021. On the said date it had approximately 1.32 million subscribers to the Dhani OneFreedom Card.

ISSUE DETAILS:
DLSL is coming out with its 4th debt offer since February 2019. Its last three debt offers were in the calendar year 2019 (February, May and July). The company is coming out with its debt offer of Secured Redeemable Non-Convertible Debentures worth Rs. 150 cr. with a greenshoe option for retaining oversubscription to the tune of Rs. 150 cr. making the overall size of the issue for Rs. 300 cr. The company is issuing NCDs having a face value of Rs. 1000 each. Minimum application to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. 

The issue opens for subscription on January 04, 2022, and will close on or before January 27, 2022. The company will be spending Rs. 7.05 cr. for this NCD issue process. From the net proceeds, it will use at least 75% for the purpose of onward lending, financing, and for the repayment of existing borrowings with interest and the balance for general corporate purposes. 

The company has changed the set of lead managers, debenture trustees as well as credit rating agency for this issue. The issue is jointly lead managed by Edelweiss Financial Services Ltd. and Trust Investment Advisors Pvt. Ltd. while Beacon Trusteeship Ltd. is the debenture trustee and KFin Technologies Pvt. Ltd. is the registrar to the issue. 

For this debt offering, the rating agency is Infomerics Valuation and Rating Pvt. Ltd. which has given IVR AA/Stable rating. This rating indicates instruments with this rating are considered to offer a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.

The company is offering coupon rates ranging from 10.03% to 11% based on the selection of series. The offer is having a tenure of 370 days, 24 months and 36 months. Interest payment options available are Monthly, Annually and Cumulative based on the series applied for. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last three fiscals, DLSL has (on a consolidated basis) posted total income / net profit (loss) of Rs. 1176.69 cr. / Rs. - (111.59) cr. (FY19), Rs. 2683.69 cr. / Rs. - (41.48) cr. (FY20) and Rs. 1765.23 cr. / Rs. 384.52 cr. For the first half of FY22 ended on September 30, 2021, it has earned a loss of Rs. - (322.56) cr. on a total income of Rs. 383.72 cr. Except for FY21, it has posted losses on its operations. This remains a major concern.

Its net NPAs stood at 1.71% as of September 30, 2021. Its current debt-equity ratio of 0.55 will stand enhanced to 0.63 post this debt issue.


Conclusion / Investment Strategy

DLSL has been posting losses with erratic top lines for the reported periods except for FY21. It has changed the set of its lead manager, rating agency as well as a debenture trustee. The new rating agency has given an AA/Stable rating which is widely accepted by the markets, but despite such rating, it is offering higher coupon rates perhaps to lure investors due to its poor financial performance. There is no harm in ignoring this risky bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 31, 2021

Review 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 before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The 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.

Email: dilip_davda@rediffmail.com

The Dhani Loans and Services NCD January 2022 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Dhani Loans and Services NCD January 2022 worth investing. The Dhani Loans and Services NCD January 2022 Note sets the NCD expectations in systematic way which tells you if Dhani Loans and Services NCD January 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Dhani Loans and Services NCD January 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.