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Indiabulls Consu. Fin. NCD Tranche - III (July 2019) offer review (Others)

  • ICFL is Indiabulls Ventures arm engaged in personal/business loans.
  • This is the Tranche III offer from this company in a short span of five months.
  • Offer is rated as CARE/AA Stable by CAR E and BWR/AA+ Stable by Brickworks.
  • It offers attractive coupon rates ranging from 9.81% to 10.52%.

About Company:

Indiabulls Consumer Finance Ltd. (ICFL) is a non-deposit taking systemically important NBFC registered with the RBI and a 100% subsidiary of Indiabulls Ventures Limited, a listed Indian company. It focuses primarily on providing personal loans, business loans (unsecured SME loans and secured SME loans) and

other loans.

In Fiscal 2018, it launched end-to-end personal loan fulfillment mobile based online application "Dhani", an automated mode of lending which will enable loan application, risk analysis, credit approval, underwriting and disbursal processes to be carried out electronically through the application. With the help of online and offline marketing, its loan disbursement is showing steady growth.

ICFL is a part of the Indiabulls Ventures group, which is a prominent financial services company providing brokering, lending and wealth management businesses, amongst other businesses. Parent company was incorporated in 1995; and its long standing presence in financial services has enabled it to establish "Indiabulls" as a recognized brand in the financial services sector. In order to ensure expansion of Company's lending operations, parent company has infused funds periodically in the form of equity in ICFL. As of March 31, 2019, it had presence in over 100 cities throughout India, through which it markets loan products, enabling to operate on a pan-India basis.

Issue Details:

The company is coming out with its debt Tranche-I offer of Secured Redeemable Non-Convertible Debentures of ₹1000 each. The base issue is for ₹100 crore and it has a green shoe option to retain oversubscription up to ₹900 crore taking the total size of the issue at ₹1000 cr. It has Shelf limit ₹3000 cr. This is the second offer from this arm (ICFL) of Indiabulls Ventures group. It just made maiden offer in the month of February 2019. 

Issue has already opened for subscription on 31.07.19 and will close on or before 30.08.19. Minimum application is to be made for 10 NCDs (i.e. ₹10000) and in multiple of 1NCD (i.e. ₹1000) thereon, thereafter. Application is to be made via ASBA mode only and allotment will be done only in demat mode. Under this offer ICFL is offering coupon rate ranging from 9.81% to 10.52% and interest payment options of Monthly, Annually, Cumulative depending upon the choice of investors. It is offering tenure of 400 days, 24 months, 36 months and 60 months. The main object of the issue is to use around 75% of the funds collected for onward lending, for repayment/prepayment of interest and principal of existing borrowings and the rest for general corpus fund needs.

The specific terms of the Secured NCDs are mentioned below

Series

I

II

III

IV

V*

VI

VII

VIII

IX

Frequency of Interest Payment

Cumulative

Annual

Cumulative

Monthly

Annual

Cumulative

Monthly

Annual

Cumulative

Minimum Application

₹10,000 (10 NCDs) across all Series

Face Value/Issue Price of NCDs (₹/NCD)

₹1,000

In multiples of thereafter(₹)

₹1,000/-(1 NCD)

Tenor

400 days

24 months

24 months

36 months

36 months

36 months

60 months

60 months

60 months

Coupon (%) per annum in Category I, II and III

NA

10.12

NA

9.81

10.27

NA

10.04

10.52

NA

Effective Yield (% per annum) for NCD Holders in Category I, II, III & IV

10.00

10.10

10.10

10.25

10.26

10.25

10.50

10.51

10.50

Mode of Interest Payment/Redemption

Through various options available

Redemption amount (₹ per NCD)for NCD Holders in Category I, II and III Effective Yield (%) (per annum) - Category I, II and III

1,110.10

1,000

1,212.52

1,000

1,000

1,340.46

1,000

1,000

1,648.35

Put and Call Option

NA

Instruments are rated as CARE/AA Stable by CARE and BWR/AA+ Stable by Brickworks.  Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. Post allotment, NCDs will be listed on BSE and NSE. 

Issue is lead managed by Edelweiss Financial Services Ltd., A K Capital Services Ltd., Axis Bank Ltd. and Trust Investment Advisors Pvt. Ltd. IDBI Trusteeship Services Ltd. is the debenture trustee while Karvy Fintech Pvt. Ltd. is the registrar to the issue. 

Financial Performance:

As at March 31, 2019, ICFL's gross NPAs as a percentage of AUM was 0.75%, and net NPAs as a percentage of AUM was 0.24%.

As of March 31, 2019, 2018 and 2017, our capital to risk (weighted) assets ratio was 37.7%, 33.52% and 90.03% respectively.

The company has posted total income/net profit of ₹654.34 cr. / ₹170.03 cr. (FY18) and ₹1650.02 cr. / ₹400.17 cr. (FY19).

Its loan book amounted to ₹10508.13 cr. as at March 31, 2019. The CRAR of 37.12% as at March 31, 2019 maintained by it is significantly higher than the minimum capital adequacy requirement of 15.00% as stipulated by the RBI.


Conclusion / Investment Strategy

Coupon rates are little lower than its previous offer of May 2019, Current subdued sentiment for NBFC sector is not auguring well for this company. Hence risk savvy cash surplus Investors may consider investment for long term at their own risk. (Other).

Reviewer not sure about the issue.

Review By Dilip Davda on Aug 1, 2019

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 prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


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.

Email: dilip_davda@rediffmail.com

The Indiabulls Consumer NCD July 2019 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 Consumer NCD July 2019 worth investing. The Indiabulls Consumer NCD July 2019 Note sets the NCD expectations in systematic way which tells you if Indiabulls Consumer NCD July 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Indiabulls Consumer NCD July 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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