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InCred Financial NCD review (Avoid)

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  •   This is the maiden debt offer from InCred Financial Services.
  •   Its net margins are showing declining trends on a consolidated basis.
  •   Net NPAs are up from 0.71 in FY19 to 1.71% in FY21.
  •   Despite CRISIL/A rating and lucrative rates, one may skip this offer.

InCred Financial Services Ltd. (IFSL) earlier known as Visu Leasing and Finance Pvt. Ltd. is a non-deposit taking systemically important NBFC registered with the RBI. The Company is engaged primarily in the business of providing personal loans, education loans, SME loans, and in providing ancillary services related to the said business activities.

As of March 31, 2021, its loan portfolio was Rs. 2,633.66 cr. and catered to 3,40,264 customers. Of the said loan portfolio, approx. 50% is in form of secured lending.

As of September 30, 2021, it has 676 permanent employees and 41 employees on a contract basis. As of the same date, it conducted operations through 19 branches and the premises of all branches have been taken on a lease or leave and license basis.

IFSL is coming out with its maiden debt offer. The company is coming out with its debt offer of Secured Redeemable Non-Convertible Debentures worth Rs. 125 cr. with a greenshoe option for retaining oversubscription to the tune of Rs. 25 cr. making the overall size of the issue for Rs. 150 cr. The company is issuing NCDs having a face value of Rs. 1000 each. Minimum application to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. 

The issue opens for subscription on January 24, 2022, and will close on or before February 14, 2022. The company will be spending Rs. 1.80 cr. for this NCD issue process. From the net proceeds, it will use at least 75% for the purpose of onward lending, financing, and for the repayment of existing borrowings with interest and the balance for general corporate purposes. Post allotment, NCDs will be listed on BSE and NSE. 

The issue is jointly lead managed by Sundae Capital Advisors Pvt. Ltd., and InCred Capital Wealth Portfolio Managers Pvt. Ltd. while Catalyst Trusteeship Ltd. is the debenture trustee and Link Intime India Pvt. Ltd. is the registrar to the issue. 

For this debt offering, the rating agency is CRISIL Ratings Ltd. which has given CRISIL/A rating. The rating may be subject to revision or withdrawal at any time by the assigning rating agency. The rating agency has a right to suspend or withdraw the rating at any time on the basis of factors such as new information. Instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

The company is offering coupon rates ranging from 9.13% to 9.25% based on the selection of series. The offer is having a tenure of 12 months 1 day and 24 months. Interest payment options available are Annually and Cumulative based on the series applied for. 

On the financial performance front, for the last three fiscals, on a consolidated basis, IFSL has posted total income/net profits of Rs.326.97 cr. / Rs. 27.72 cr. (FY19), Rs. 332.67 cr. / Rs. 5.16 cr. (FY20) and Rs. 392.48 cr. / Rs. 2.17 cr. (FY21). FY19 earnings include an exceptional item of Rs. 33.17 cr. (at gross level). 

On a standalone basis, it has earned a net profit of Rs. 7.17 cr. on a total income of Rs. 233.82 cr. for the first half of FY22 ended on September 30, 2021. The company has not given consolidated results for the said period which is surprising. 

IFSL's debt-equity ratio of 1.62 as of March 31, 2021, will stand enhanced to 1.76 post this issue. Its net NPA increased from 0.71% in FY19 to 1.71% in FY21. 

Conclusion / Investment Strategy

Though this debt offer is with CRISIL/A rating and offers lucrative coupon rates, considering declining margins and rising NPAs, there is no harm in skipping this debt offering. The company not showing consolidated FY22 H1 performance raises concern.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on January 22, 2022

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 InCred Financial Services NCD January 2022 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if InCred Financial Services NCD January 2022 worth investing. The InCred Financial Services NCD January 2022 Note sets the NCD expectations in systematic way which tells you if InCred Financial Services NCD January 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in InCred Financial Services NCD January 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.