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Indel Money NCD issue review (May apply)

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•    This is the maiden debt offer from IML. 
•    Its financial data is non-illusive.
•    Though coupon rates are lucrative, poor rating makes it a bit risky offer.
•    Risk seekers/cash surplus investors may park their funds, others may ignore. 

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's Gold Loan portfolio as of March 31, 2021, March 31, 2020, and March 31, 2019, contributed 77.72%, 87.99% and 84.43% of total loans and advances as on such specific dates. As of August 31 2021, the company had a network of 191 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh and Telangana and the union territory of Puducherry, and a headcount of 763.

The company claims to be the first to introduce Doorstep Gold Loan and the digital process for speedy distribution and recovery of dues for growing its business. The company has planned to expand its branch network to 425 and spread its wings to northern and western regions with a commensurate increase in headcounts by 2025.

The company is coming out with its maiden debt offer of Secured/unsecured redeemable non-convertible debentures (NCDs) having a face value of Rs. 1000 each. The company will have a base issue size of Rs. 75 cr. and with a greenshoe option of Rs. 75 cr., the overall size of the offer will be Rs. 150 cr. The issue opens for subscription on September 23, 2021, and will close on or before October 18, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. The company will be spending Rs. 2.33 cr. for this entire debt offer of Rs. 150 cr. 

From the net proceeds, the company will utilize up to 75% for onward lending, financing, repayment/prepayment of certain borrowings with interest and 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 366 days, 18 months, 36 months, 54 months for secured NCDs while 61 months and 71 months for unsecured NCDs.  The company is offering interest rates ranging from 9.25% to 11% for secured NCDs and 12% for unsecured NCDs. The interest payments have monthly, annually and cumulative modes as per the options selected by the investors. 

This debt offering is rated CRISIL/BBB (Stable) by CRISIL Ltd. indicating that instruments with such rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. CRISIL may suspend, withdraw or revise this raging any time and it should not be considered as an invitation to subscribe to this debt issue. 

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. The sudden boost in the bottom line for FY 21 i.e. pre-debt issue year raises eyebrows. 

As of March 31, 2021, its paid-up equity capital of Rs. 82.15 cr. is supported by free reserves of Rs. 5.48 cr. Till FY20 it had negative other equity. 

As of the same date its net NPA stood at 0.11% and debt-equity ratio (on a consolidated basis) was 4.18 that will stand enhanced to 5.89 post this issue. 

Conclusion / Investment Strategy

Though this maiden debt offer has very lucrative coupon rates, poor rating and the lacklustre financial data makes it a bit risky. While cash surplus/risk seekers may consider this offer, others can ignore it.

Review By Dilip Davda on September 22, 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 Indel Money NCD Sep 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 Indel Money NCD Sep 2021 worth investing. The Indel Money NCD Sep 2021 Note sets the NCD expectations in systematic way which tells you if Indel Money NCD Sep 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Indel Money NCD Sep 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.