InCred Financial Oct 23 NCD Issue review (May apply)

• This is the 3rd debt issue from IFSL since January 2022.
• Last issue was in January 2023.
• The company is offering lucrative coupon rates with A+/Stable rating.
• Investors looking for steady income may park funds for medium to long term.

ABOUT COMPANY:
InCred Financial Services Ltd. (IFSL) is a non-deposit taking systemically important NBFC registered with the RBI. It caters to lower middle class to middle class Indian households for their personal finance needs like education loans, personal loans. Correspondingly, it also offers secured and unsecured business loans to small businesses, secured loan to K12 Indian schools for their expansion plans, supply chain financing, lending to profitable financial Institutions and micro finance companies and escrow backed lending through its SME vertical.

It was incorporated as Multiflow Financial Services Private Limited and 4 changed its name to KKR India Financial Services Private Limited and was changed to KKR India Financial Services Limited. Finally, its name was changed from KKR India Financial Services Limited to InCred Financial Services Limited.

The Company is registered as a non-deposit accepting systemically important nonbanking financial company with the Reserve Bank of India. Currently the company continues to offer personal loans, education loans and MSME loans. As of June 30, 2023, and March 31, 2023, its AUM was Rs. 64835 cr. and Rs. 60624.44 cr., respectively and the Company catered to 4,18,704 and 3,76,879 customers respectively during the said periods. As of June 30, 2023, IFSL had 43 branches and 1406 employees spread across 9 states in India.

ISSUE DETAILS:
The company is coming out with its 3rd debt offer since January 2022. IFDL is offering Secured, Rated, Listed, Redeemable, Non-Convertible Debentures having a face value of Rs. 1000 each. This time it has planned a base size issue of Rs. 150 cr. with a green shoe option to retain oversubscription up to Rs. 150 cr. making it a total issue of Rs. 300 cr. The issue opens for subscription on October 25, 2023, and will close on or before November 07, 2023. Post allotment, NCDs will be listed on BSE. The last debt issue from the company was in January 2023.

IFSL is spending Rs. 4.93 cr. for this NCD issue and from the net proceeds, it will utilize at least 75% for onward lending, financing and for repayment of certain borrowings, and maximum up to 25% for general corporate purposes.

The issue is jointly lead managed by JM Financial Ltd., and InCred Capital Wealth Portfolio Managers Pvt. Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue. Catalyst Trusteeship Ltd. is the Debenture Trustee for the issue.

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 interest payment frequency will be Monthly, Quarterly or Annual as per the selection of the series by the investors. It is offering a coupon rate ranging from 9.48% to 10.30%, and has a tenors of 18 months, 24 months, and 36 months. The company has allocated 5% for Institutional Investors, 10% for Non-Institutional Investors, 40% for HNIs and 45% for Retail investors.

CREDIT RATING:
The issue is rated as CRISIL A+/Stable by CRISIL Ratings Ltd. Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. Rating given by CRISIL Ratings Limited is valid as on the date of this Prospectus and shall remain valid on date of issue and allotment of NCDs and the listing of the NCDs on Stock Exchange. The rating is not a recommendation to buy, sell or hold the rated instrument and CRISIL Ratings Limited does not comment on the market price or suitability for any particular investor and investors should take their own decisions.

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. In case of any change in credit ratings till the listing of NCDs, the Company will inform the investors through public notices/ advertisements in all those newspapers in which pre issue advertisement has been given.

FINANCIAL PERFORMANCE:
On the financial performance front, IFSL has posted a total income/net profit of Rs. 521.22 cr. / Rs. 36.12 cr. (FY22), Rs. 876.54 cr. / Rs. 120.80 cr. (FY23)

For Q1 of FY24, as per unaudited results announced, it earned a net profit of Rs. 62.78 cr. on a total income of Rs. 271.83 cr. Its net NPA stood as 0.91% for FY23 against 1.43% for FY22. Its debt equity ratio of 1.6 as of March 31, 2023, will stand enhanced to 1.7 post this NCD issue.

Conclusion / Investment Strategy

The company has posted improved performances for the reported periods. The issue offers lucrative coupon rates with A+/Stable rating. Investors looking for steady income may park funds for medium to long term.

Review By Dilip Davda on October 19, 2023

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 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 Incred Financial Services October 2023 NCD 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 October 2023 NCD worth investing. The Incred Financial Services October 2023 NCD Note sets the NCD expectations in systematic way which tells you if Incred Financial Services October 2023 NCD good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Incred Financial Services October 2023 NCD by providing NCD recommendations i.e. subscribe, avoid and neutral.

InCred Financial Oct 23 NCD Issue review (May apply)

Conclusion / Investment Strategy

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