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IIFL Finance Tranche-II NCD issue review (Apply)

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•    IIFLFL is coming with its 2nd debt offer after March 2021. 
•    Tranche-I being an Unsecured debt issue, it was with higher coupon rates. 
•    This time coupon rates are lower due to the Secured debt issue.
•    Investors looking for regular returns may consider an investment.

IIFL Finance Ltd. (IIFLFL), erstwhile known as IIFL Holdings Ltd.) is a Systemically Important Non-deposit taking Non-Banking Financial Company ("NBFC-ND-SI") registered with the RBI, catering to the credit requirements of a diverse customer base with its plethora of products. Its offerings include home loans, gold loans, business loans including loans against property and medium and small enterprise financing, microfinance, construction and real estate finance and capital market finance; catering to both retail and corporate clients.

IIFLFL's total loan book stood at Rs. 32901.49 cr. as of Jun 30, 2021. Its AUM as of said date was Rs. 43160.23 cr. Its average cost of borrowing as of Jun 30, 2021, was 8.94%. On the said date, its branch network stood at 2682 with a workforce of 22638 employees.

The company is coming out with its 2nd debt offer under Tranche-II. Its Tranche-I came in March 2021. The company mulls raising overall Rs. 1000 cr. with a base size of Rs. 100 cr. and greenshoe option of Rs. 900 cr. The company has an overall Shelf limit of Rs. 5000 cr. The company is offering secured redeemable NCDs having a face value of Rs. 1000 each. The issue opens for subscription on September 27, 2021, and will close on or before October 18, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE. It will spend around Rs. 23.52 cr. for Tranche-II of Rs. 1000 cr. 

From the net proceeds, IIFLFL will utilize up to 75% for onward lending, financing, repayment/prepayment of certain borrowings with interest and up to 25% for general corporate purposes. 

The issue is jointly lead managed by Edelweiss Financial Services Ltd., IIFL Securities Ltd. and Equirus Capital Pvt. Ltd., Catalyst Trusteeship Ltd. will be the debenture trustee and Link Intime India Pvt. Ltd. will be the registrar to the issue. 

This debt issue has tenures of 24 months, 36 months and 60 months with coupon rates ranging from 8.25% to 8.75%. The interest payment mode is annual, monthly and cumulative as per the selection of series. Allotment will be done on a "First come - First Serve" basis. 

This issue is rated CRISIL/AA (Stable) by CRISIL Ltd. and BWR AA+/(Negative) by Brickwork Ratings India Pvt. Ltd. The aforesaid rating indicates that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. These ratings are subject to revision or withdrawal at any time by the assigning rating agencies and reserves rights for an act in this regard based on new information. 

On the financial performance front, on a consolidated basis, for the last three fiscals, IIFLFL has posted total income/net profits of Rs. 5148.96 cr. / Rs. 795.80 cr. (FY19), Rs. 4926.13 cr. / Rs. 503.47 cr. (FY20) and Rs. 5989.40 cr./ Rs. 760.81 cr. (FY21). Thus it has shown inconsistency in its top and bottom lines for these periods. For the Q1 of FY22, its profits before tax stood at Rs. 350.50 cr. on a total income of Rs. 1531.67 cr. 

As of Jun 30, 2021, its paid-up equity capital of Rs. 75.80 cr. is supported by free reserves of Rs. 5563+ cr. As of the same date, its net NPA stood at 1.02%. Its debt-equity ratio of 5.69 as of June 30, 2021, will enhance to 5.87 post this issue of Rs. 1000 cr. 

Conclusion / Investment Strategy

Debt offer from IIFLFL under Tranche-I (March 21) was unsecured with higher coupon rates, while Tranche-II (Sept. 21) is secured NCD with lower coupon rates. Considering the lowering interest rates regime, investors looking for regular steady income may consider investing in this offer with a long term perspective.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on September 22, 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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

The IIFL Finance NCD September 2021 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if IIFL Finance NCD September 2021 worth investing. The IIFL Finance NCD September 2021 Note sets the NCD expectations in systematic way which tells you if IIFL Finance NCD September 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in IIFL Finance NCD September 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.