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• This is the maiden debt offer from the company.
• The aggregate size of the issue is Rs. 1000 cr. including green shoe option of Rs. 800 cr.
• This issue is rated CRISIL AA-/Positive and ACLUITE AA/Stable.
• The company has posted growing financial performance with branch expansions.
• Investors looking for steady income may park funds for the medium to long term.
ABOUT COMPANY:
IIFL Samasta Finance Ltd. (ISFL) - formerly known as Samasta Microfinance Ltd. - is a systematically important Non-Banking Finance (non - deposit accepting or holding) Company - micro Finance Institution (NBFC MFI) in India that offers innovative and affordable financial products to women who are enrolled as members and organized as Joint Liability Group ("JLG") from unbanked sections in society including encompassing cultivators, agricultural laborers, vegetable and flower vendors, cloth traders, tailors, craftsmen, as well as household and industrial workers across rural, semi urban and urban areas in India.
ISFL is a subsidiary of IIFL Finance Limited. It offers wide range of loans tailored for underserved individuals who lack access to traditional banking services and includes income generation loans ("IGL") (to establish a new enterprise or expand an existing business), top-up loans, loan against property, micro enterprise loan, Lifestyle and Family Welfare loans such as dairy cattle loan, sanitation and hygiene, acquisition of daily-use items like cook stoves, water purifiers, solar lights, mobile phones, and other products enhancing their way of life. Going beyond ISFL's financial services, the Company also provides non-financial services, including life and hospicash insurance, along with financial counseling, ensuring comprehensive support for its valued customers.
The company believes that its customer-centric business model, wide range of product offerings, as well as well-designed product delivery and collection systems, have enabled it to achieve low credit costs. Its average cost of borrowing in Fiscal 2023 and six months' period ending September 30, 2023 were 9.98% and 10.49%, respectively.
It has followed a strategy of contiguous branch expansion across regions. As of September 30, 2023, it had presence with 1485 branches in the 21 states and one union territory in India through 14286 employees (including trainees), serving an active customer base of 27.20 lakh, as of September 30, 2023.
ISSUE DETAILS:
The company is coming out with its maiden debt issue to mobilize Rs. 1000 cr. as an aggregate amount. It has planned a secured NCD issue with a base size of Rs. 200 cr. and has a green shoe option to retain oversubscription to the tune of Rs. 800 cr. It has a shelf limit of Rs. 2000 cr. The company is issuing secured, redeemable non-convertible-debentures having a face value of Rs. 1000 each. A minimum application is to be made of 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. The issue opens for subscription on December 04, 2023, and will close on or before December 15, 2023. Post allotment, NCDs will be listed on BSE and NSE. ISFL is spending Rs. 18.47 cr. for this Rs. 1000 cr. NCD issue and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing, repayment of existing borrowings, and maximum up to 25% for general corporate purposes.
The company has allocated 10% for Institutional portion, 10% for Non-institutional portion, 40% for HNIs and 40% for Retail investors.
The issue is jointly lead managed by JM Financial Ltd., IIFL Securities Ltd., Nuvama Wealth Management Ltd., and Trust Investment Advisors Pvt. Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue. Beacon Trusteeship Ltd is the debenture trustee.
This NCD issue has tenors of 24 months, 36 months, and 60 months. It offers a coupon rate ranging from 9.21% to 10.50% with interest payment options of Monthly or Annual, as per the series opted by the investors. The allotment will be in demat mode only. Put and Call option is not applicable for this issue.
ISSUE RATINGS:
This debt offer is rated CRISIL AA-/ Positive by CRISIL Ratings Ltd., and ACUITE AA/Stable by Acuite Ratings and Research Ltd.
Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. This rating is not a recommendation or suggestion, directly or indirectly, to buy, sell, make or hold securities and investors should take their own decisions.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, ISFL has posted a total income of Rs. 1019.93 cr. / Rs. 50.60 cr. (FY22), and Rs. 1753.51 cr. / Rs. 128.18 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 232.97 cr. on a total income of Rs. 1279.49 cr. Thus it posted growth in its top and bottom lines for the reported periods.
As of September 30, 2023 its net NPAs stood at Rs. 47.26 crore and gross NPA were at Rs. 174.91 crore, which amounts to 0.57 % and 2.11 %, respectively, as a percentage of gross loan book. ISFL's debt equity ratio of 5.19 as of September 30, 2023, will stand enhanced to 6.48 post this issue. As of the said date, its paid up equity capital of Rs. 593.64 cr. is supported by free reserves of Rs. 960.45 cr.
Review By Dilip Davda on November 29, 2023
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 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: dilip_davda@rediffmail.com ).
The IIFL Samasta Finance NCD Tranche I Nov 2023 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 Samasta Finance NCD Tranche I Nov 2023 worth investing. The IIFL Samasta Finance NCD Tranche I Nov 2023 Note sets the NCD expectations in systematic way which tells you if IIFL Samasta Finance NCD Tranche I Nov 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in IIFL Samasta Finance NCD Tranche I Nov 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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