• This is the second debt offer from this company within seven months.
• Last offer was in July 2021.
• This offer is having only secured instruments with AA ratings.
• Investors looking for a regular income may consider an investment.
ABOUT COMPANY:
IIFL Home Finance Ltd. is a retail-focused housing finance company with the main focus on providing loans to first time home buyers in the EWS and LIG segment in the suburbs of Tier 1 cities, Tier 2 cities and Tier 3 cities in India where the collateral is a proposed self-occupied residential property. It serves salaried and self-employed customers who account for 47.23% and 52.77% of the company's AUM as of September 30, 2021, respectively. The company has served over 157,000 customers as of September 30, 2021.
It offers customers a range of mortgage-related loan products, including (i) housing loans, for purchase of ready built residential units, under-construction property by approved builders, self-construction, home improvement on pre-owned property and purchase of land for construction of residential property; (ii) secured business loans, for primarily meeting working capital requirement, business use and purchase of commercial property; and (iii) affordable housing project loans, to meet construction expenses of affordable housing projects of reputed developers. Housing loans, secured business loans and affordable housing project loans contribute 69.78%, 26.00% and 4.22% of the company's AUM, as of March 31, 2021, respectively and 73.10%, 24.66% and 2.24% of AUM, as of September 30, 2021, respectively. The housing loan and secured business loans have an average loan-to-value of 71.78% and 47.24%, respectively, at the time of sanctioning of the loans. The average ticket size of housing loans, secured business loans and affordable housing project loans was ₹1.70 million, ₹2.52 million and ₹339.81 million, respectively, as of September 30, 2021.
It has a widespread network of 127 branches in 16 states and one union territory as of September 30, 2021. As of March 31, 2021, and September 30, 2021, the company was servicing 125,399 and 137,769 active loan accounts, respectively.
ISSUE DETAILS:
The company is coming out with its second debt offer within a span of seven months. This time the company will be issuing Secured, Redeemable NCDs having a face value of Rs. 1000 per unit. The company is issuing NCDs worth Rs. 100 cr. and has a greenshoe option to retain oversubscription to the tune of Rs. 900 cr. thus making an overall issue size of Rs. 1000 cr. It holds a shelf limit of Rs. 5000 cr. worth debt issue. The issue opens for subscription on December 08, 2021, and will close on or before December 28, 2021. Minimum application is to be made for 10 NCDs (Rs. 10000) and in multiples of 1 NCD (Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE.
The company will be spending Rs. 23.52 cr. for this debt offer of Rs. 1000 cr. and from the net proceeds, it will utilize up to 75% for onward lending, financing, repayment/prepayment of certain borrowing with interest and up to 25% for general corporate purposes.
This issue is jointly lead managed by Edelweiss Financial Services Ltd., IIFL Securities Ltd., ICICI Securities Ltd., Equirus Capital Pvt. Ltd. and Trust Investment Advisors Pvt. Ltd., and Catalyst Trusteeship Ltd. is the debenture trustee while Link Intime India Pvt. Ltd. is the registrar to the issue.
This offer has tenures of 36 months, 60 months and 84 months and coupon rates ranging from 8.20% to 8.75% and the interest payment frequency will be Monthly, Annually or Cumulative as per the choice of series. Allotment will be done on a "First Come - First Served" basis. The quota is reserved for Institutions 20%, Non-Institutions 10%, HNIs 35% and Retail investors 35%.
This offer is rated CRISIL AA/Stable by CRISIL Ratings 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.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 1846.11 cr. / Rs. 306.39 cr. (FY19), Rs. 1803.02 cr. / Rs. 244.92 cr. (FY20) and Rs. 2067.75 cr. / Rs. 401.10 cr. (FY21). For the first half-year of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 284.03 cr. on a total income of Rs. 1066.91 cr. As of September 30, 2021, its paid-up equity capital of Rs. 20.97 cr. is supported by free reserves of Rs. 2410.84 cr.
Its current debt-equity ratio of 5.37 will rise to 5.78 post this issue.
Review By Dilip Davda on December 6, 2021
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
