IIFL Fin June 23 Tranche II NCD issue review - (Apply)

•    IFL is an RBI-registered NBFC catering to credit requirements for retail and corporate clients.
•    This is the 4th debt offer from the company since March 2021.
•    It has been posting growth in its top and bottom lines for the last three fiscals. 
•    The company has a sound financial track record.
•    Investors looking for a steady return for the medium to long term may park funds. 

ABOUT COMPANY:
IIFL FINANCE LTD. (IFL) 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, 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.

Its total Asset Under Management (AUMs) was Rs. 44688.03 cr. (FY21), Rs. 51209.79 cr. (FY22), and Rs. 64537.64 cr. As of March 31, 2023, it had 4267 branches and 33910 employees on its payroll.

IFL's revenue from operations on a consolidated basis grew at a CAGR of 19.46% and on a standalone basis grew at a CAGR of 15.27% over the last three Fiscals. 

This is the 4th debt offer from IFL since March 2021, and the last debt offer was in January 2023.

ISSUE DETAILS:
The company is coming out with its Tranche II NCD issue to mobilize Rs. 1500 cr. The base size of the issue is Rs. 300 cr. and it has a green shoe option to retain oversubscription to the tune of Rs. 1200 cr. The shelf limit of this debt offer is Rs. 5000 cr. The company is issuing Secured Redeemable Non-Convertible Debentures having a face value of Rs.1000 each. The issue opens for subscription on June 09, 2023, and will close on or before June 22, 2023. The minimum application to be made is for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs.1000) thereon, thereafter. The allotment will be made on a "First Come - First Served" basis. Post-allotment NCDs will be listed on BSE and NSE. The company will be spending Rs. 26.11 cr. for Tranche II of the debt issue and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing, refinancing existing indebtedness of the company, and maximum up to 25% for general corporate purposes.  

The issue is jointly lead managed by Edelweiss Financial Services Ltd., IIFL Securities Ltd., Equirus Capital Pvt. Ltd. and Trust Investment Advisors Pvt. Ltd., Link Intime India Pvt. Ltd. is the registrar of the issue, and Vardhman Trusteeship Pvt. Ltd. is the Debenture Trustee. 

This issue has a tenor of 24 months, 36 months and 60 months and interest payment frequency of Monthly, Annual or Cumulative basis as per the selection of the series by the investors. It carries coupon rates ranging from 8.35% to 9.00%.  

CREDIT RATINGs:
This debt offer is rated CRISIL AA/Stable by CRISL Ltd., and ICRA AA/Stable by ICRA Ltd. The rating given by CRISIL and ICRA are valid as of the date of this Tranche II Prospectus and shall remain valid until the ratings are revised or withdrawn. The aforesaid rating indicates that instruments with this rating are considered to have a high degree of safety regarding the 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. 

The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The rating agency has a right to suspend or withdraw the rating at any time on the basis of factors such as new information. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, IFL has (on a consolidated basis) posted a total income/net profit of Rs.5968.04 cr. / Rs. 760.81 cr. (FY21), Rs. 7023.61 cr. / Rs. 1188.25 cr. (FY22), and Rs. 8447.11 cr. / Rs. 1607.55 cr. (FY23). As of March 31, 2023, its paid-up equity capital of Rs. 76.09 cr. is supported by free reserves of Rs. 8915.97 cr. Its current debt-equity ratio of 3.88 will rise to 4.03l post this issue. Its net NPA as of March 31, 2023, was at 1.08% against 1.83% a year ago. Its loan book as of March 31, 2023, stood at Rs. 40101.87 cr.