Indiabulls Commercial April 23 NCD review (May apply)

Indiabulls Commercial Credit Limited Logo

•    This is the 3rd debt offer from ICCL since September 2018.
•    The last debt offer was in the month of January 2023.
•    This time it has increased the upward rate a bit for HNI and Retail categories.
•    Investors looking for a steady return may consider parking funds for the medium to long term.

Indiabulls Commercial Credit Ltd. (ICCL) is a non-deposit-taking NBFC registered with the RBI and a 100% subsidiary of IHFL (Indiabulls Housing Finance Ltd.), a listed housing finance company ("HFC"). It is also a notified financial institution under the SARFAESI Act.

ICCL predominantly offers long-term mortgage loans, which comprise (a) retail mortgage loans to self-employed individuals, proprietorships, and small businesses; and (b) corporate mortgage loans to developers of residential projects. As of March 31, 2022, its Loan book was Rs. 10950.30 crores, 74% of which comprised mortgage loans. Its target client base comprises salaried and self-employed individuals as well as small and medium-sized enterprises. The company offers mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance. Personal loans, as a product line of its business, have been discontinued and the vintage book is in run-down mode.

As of December 31, 2022, it had 36 branches spread across India, out of which 29 premises are its parent's branches, where the company has been granted access to certain workstations under a memorandum of understanding with IHFL. It has arrangements with 984 direct sales agents and channel partners for referring potential customers, which source 65% of customers. The remaining customers are sourced through its in-house direct sales team, comprising over 2,200 employees across the network (including that of IHFL).

ICCL is coming out with its 3rd debt offer of secured, redeemable non-convertible debentures of Rs. 1000 each, worth Rs. 100 cr. as a base size and has a green shoe option to retain oversubscription to the tune of Rs. 100 cr. thus, eventually making an overall issue size of Rs. 200 cr. It has a shelf limit of Rs. 1000 cr. and this is its Tranche II issue. Its last debt offer was in the month of January 2023. The issue opens for subscription on April 03, 2023, and will close on or before April 19, 2023. The minimum application is to be made for Rs. 10000 i.e. 10 NCDs and in multiple of Rs. 1000 i.e. 1 NCD, thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE. ICCL is spending Rs. 17.50 cr. for this Tranche I issue and from the residual amount, it will utilize at least 75% for onward lending, financing, repayment/prepayment of existing borrowings, and up to 25% for general corporate purposes. 

Edelweiss Financial Services Ltd., Elara Capital (India) Pvt. Ltd., and Trust Investment Advisors Pvt. Ltd. are the joint lead managers for this issue. KFin Technologies Ltd. is the registrar of the issue and Beacon Trusteeship Ltd. is the Debenture Trustee. 

This debt offer has tenors of 24 months, 36 months, and 60 months with monthly, annual, or cumulative interest payment options as per the series opted by the applicants. The company is offering coupon rates ranging from 9.20% to 10.50%. The company has allocated 30% for the Institutional portion, 10% for the Non-institutional portion, 30% for HNIs, and 30% for Retail investors.  

This debt offering is rated as CRISIL/AA Stable by CRISIL Ratings Ltd. and ICRA/AA Stable by ICRA Ltd. These ratings signify a high degree of safety, regarding the timely servicing of financial obligations and low credit risk. These ratings are subject to suspension, revision or withdrawal at any time by the assigning rating agencies and should be evaluated independently of any other ratings. 

On the financial performance front, for the last three fiscals, ICCL has posted a total income/ net profit of Rs. 2191.28 cr. / Rs. 19.81 cr. (FY20), Rs. 1632.94 cr. / Rs. 139.04 cr. (FY21), and Rs. 1841.88 cr. / Rs. 508.22 cr. (FY22). The sudden boost in its bottom lines for FY21 and FY22 raises eyebrows. For the 3Qs of FY23, it earned a net profit of Rs. 301.44 cr. on a total income of Rs. 1426.58 cr. 

Its net NPAs for the last three fiscals were 2.26% (FY20), 3.20% (FY21), and 1.79% (FY22). For the 3Qs of FY23 that ended on December 31, 2022, its NPA stood at 2.31%. As of the said date, its paid-up equity capital of Rs. 247.80 cr. is supported by free reserves of Rs. 5091.50 cr. and its debt-equity ratio as of the said date was 1.39, which will stand enhanced to 1.43 post this issue.

Conclusion / Investment Strategy

While we are witnessing a surge in the interest rates globally, on the domestic front too, such trends are likely and amidst such a scenario, this attractive offer with lucrative rates and AA/Stable rating may be considered for medium to long-term steady income plans by the investors looking for regular income.

Review By Dilip Davda on Mar 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, 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: dilip_davda@rediffmail.com ).

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


1. Kamal Garg     Link|Apr 3, 2023 11:24:50 AM
Two concerns :
(1) Should one invest in the parent company's NCD issue (of course, now closed) at 9.71% coupon (with monthly interest payout) or should one invest in this company at 10.03% coupon (with monthly interest payout).
(2) While this company is also into “long-term secured mortgage-backed loans”, whereas parent Indiabulls Housing Finance is also into “long-term secured mortgage-backed loans”. So what is the difference or fine difference between these two companies – holding and subsidiary company.
Both companies enjoy same credit rating, still, would it not be better to invest in parent Indiabulls Housing Finance's NCD.