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IIFL Home Fin Tranche II NCD Dec 21 issue review (Apply)

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•    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. 

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. 

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.

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. 

Conclusion / Investment Strategy

Amidst the falling interest rates regime, investors looking for regular income may consider this secured debt offer having AA ratings and lucrative coupon rates.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on December 6, 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 Home Finance NCD December 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 Home Finance NCD December 2021 worth investing. The IIFL Home Finance NCD December 2021 Note sets the NCD expectations in systematic way which tells you if IIFL Home Finance NCD December 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in IIFL Home Finance NCD December 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.