Indel Money June 23 NCD issue review (May apply)

• This is the 3rd debt offer from the company since September 2021.
• Time and again, the rating agency is changed by the company.
• Though coupon rates are lucrative, poor rating makes it a bit risky offer.
• Well-informed/Risk seekers/cash surplus investors may park their funds, while others may ignore them.

ABOUT COMPANY:
Indel Money Ltd. (IML), the Indel group company is a non-deposit taking and a non - systemically important non-banking finance company ("NBFC") in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana and the union territory of Puducherry. It also provides loans against property, business loans and personal loans.

IML is one of the few gold loan companies which has launched a long-term 2-year gold loan scheme to support the cash and liquidity requirements of customers. The 2-year gold loan schemes account for 0.02% of the gold loan portfolio of the Company for Fiscal 2023.

Its Gold Loan portfolio (excluding off-balance sheet assets) for the nine-month ended December 31, 2022, and Fiscal 2022, 2021 and 2020 amounted to Rs. 546.80 cr., Rs. 421.36 cr., Rs. 309.94 cr., and Rs. 295.89 cr. which is 80.62%, 80.46%, 77.71% and 87.99% of total loans and advances (excluding off-balance sheet assets) as on such specific dates. As on March 31, 2023, IML had a network of 245 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Odisha, Maharashtra and Telangana and the union territory of Puducherry. The offer document is silent on its current headcount data.

The company claims to be the first to introduce Doorstep Gold Loan and the digital process for speedy distribution and recovery process for its business.

ISSUE DETAILS:
The company is coming out with its 3rd debt offer of Secured redeemable non-convertible debentures (NCDs) having a face value of Rs. 1000 each. The company will have a base issue size of Rs. 50 cr. and with a green shoe option of Rs. 50 cr., the overall size of the offer will be Rs. 100 cr. The issue opens for subscription on June 06, 2023, and will close on or before June 19, 2022. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. The company will be spending Rs. 2.10 cr. for this entire debt offer of Rs. 100 cr.

From the net proceeds, the company will utilize at least 75% for onward lending, financing, repayment/prepayment of certain borrowings with interest and a maximum of up to 25% for general corporate purposes.

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd., Vistra ITCL (India) Ltd. is the debenture trustee and Link Intime India Pvt. Ltd. is the registrar to the issue.

This issue has tenures of 400 days, 24 months, 61 months and 72 months for secured NCDs The company is offering interest rates ranging from 9.00% to 11.5%. The interest payments have monthly and cumulative modes as per the options selected by the investors.

ISSUE RATING:
IML has once again changed the rating agency for its debt offer. This debt offering is rated CRISIL BBB+/Stable by CRISIL Ratings Ltd. The instruments with this rating are considered to have a moderate degree of safety and moderate credit risk. The rating given by CRISIL is valid as of the date of this Prospectus and shall remain valid on the date of the issue and allotment of NCDs and the listing of the NCDs on BSE. The ratings provided by CRISIL may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and Investors should take their own decisions.

FINANCIAL PERFORMANCE:
On the financial performance front, on a consolidated basis, for the last three fiscals, IML has reported a total income/net profit of Rs. 42.88 cr. / Rs. 1.57 cr. for FY19, Rs. 63.07 cr. / Rs. 2.19 cr. for FY20 and Rs. 94.49 cr. / Rs. 9.49 cr. for FY21, and Rs. 123.00 cr. / Rs. 2.11 cr. for FY22. For the nine months period of FY23 ended on December 31, 2022, it earned a net profit of Rs. 13.75 cr. on a total income of Rs. 129.30 cr. The sudden boost in the bottom line for FY 21 and 9M of FY23 raises eyebrows.

Its current debt-equity ratio of 5.17 will be enhanced to 5.94 post this debt issue. As of March 31, 2022, it's 93.15 cr. equity capital is supported by free reserves worth Rs. 7.08 cr. As of December 31, 2022, its net NPA stood at 1.66%, up from 0.01% as of March 31, 2020, and raised concern.

Conclusion / Investment Strategy

Though this debt offer has lucrative coupon rates, the average rating from a changed rating agency raises concern. Well-informed/Cash surplus/risk seekers investors may consider parking funds, while others may ignore it.

Review By Dilip Davda on May 31, 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 Indel Money NCD June 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 Indel Money NCD June 2023 worth investing. The Indel Money NCD June 2023 Note sets the NCD expectations in systematic way which tells you if Indel Money NCD June 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Indel Money NCD June 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Indel Money June 23 NCD issue review (May apply)

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