Indiabulls HF NCD Tranche V review (May apply)

• This is the 13th debt issue from IHFL since September 2016.
• The issue is rated AA/Stable by CRISIL and ICRA.
• It offers coupon rates ranging between 8.88% to 10.25%.
• Its previous issue was in December 2023.
• Investors looking for steady income may consider moderate investment for medium to long-term.

ABOUT COMPANY:
Indiabulls Housing Finance Ltd. (IHFL) is a non-deposit taking housing finance company ("HFC") registered with the NHB. It is also a notified financial institution under the SARFAESI Act. The company pre-dominantly offer housing loans and loans against property to varied client base which comprises (i) salaried employees; (ii) self-employed individuals; (iii) micro, small and medium-sized enterprises ("MSMEs") and (iv) corporates.

IHFL focuses primarily on long-term secured mortgage-backed loans. It also offers mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance for the construction of residential premises. A majority of its Loan Book comprises housing loans, including in the affordable housing segment.

As on December 31, 2023, its Loan Book was Rs. 46034.59 crores, on a standalone basis, and Rs. 55,917.07 crores, on a consolidated basis. As of the said date, it had a network of 217 branches spread across India which gives it a Pan-India presence. Its presence across India allows the company to undertake loan processing, appraisal, and management of customer relationships in an efficient and cost-effective manner. As of December 31, 2023, it had a direct sales team of 1589 employees, on a consolidated basis, who are located across network. This sales team is instrumental in sourcing the majority of customers. It also relies on external channels, such as direct sales agents for referring potential customers. In addition, it has an online home loans fulfilment platform called e-Home Loans which allows customers to apply for a home loan and upload the requisite documents online.

ISSUE DETAILS:
The company is coming out with its Tranche-V secured redeemable NCD of Rs. 1000 each to mobilize Rs. 100 cr. and it has a green shoe option to retain oversubscription to the tune of Rs. 100 cr., thus making an overall issue size of Rs. 200 cr. It has a shelf limit of Rs. 2000 cr. The issue opens for subscription on March 05, 2024, and will close on or before March19, 2024. 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. Post allotment, NCDs will be listed on BSE and NSE. This is the 13th debt issue from the company since September 2016.

IHFL is spending Rs. 6.88 cr. for this debt issue. From the net proceeds, it will utilize at least 75% for the onward lending, financing or repayment with interest of certain borrowings and up to 25% for general corporate purposes.

This issue is jointly lead managed by Nuvama Wealth Management Ltd. (erstwhile known as Edelweiss Financial Services Ltd.), Elara Capital (India) Pvt. Ltd., and Trust Investment Advisors Pvt. Ltd., while IDBI Trusteeship Services Ltd. is the Debenture Trustee. KFin Technologies Ltd. is the registrar of the issue.
This debt offer has coupon rates ranging from 8.88% to 10.25% and tenors of 24 months, 36 months, 60 months, 84 months, and 120 months. The frequency of interest payment will be Monthly, Annually or Cumulative as per the selection of the series applied.

The company has allocated 30% for Institutions, 10% for Non-Institutions, 30% for HNIs and 30% for Retail investors.

ISSUE RATING:
This debt offer is rated CRISIL AA/Stable by CRISIL Ratings Ltd., and ICRA AA/Stable by ICRA Ltd. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. 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.

Securities with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such securities carry very low credit risk.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, IHFL has (on a consolidated basis) posted a total income/net profits of Rs. 10030.12 cr. / Rs. 1201.59 cr. (FY21), Rs. 8993.90 cr. / Rs. 1177.74 cr. (FY22), and Rs. 8725.79 cr. / Rs. 1127.68 cr. (FY23). Thus its top and bottom line posted declining trends. For 3Qs of FY24 ended on December 31, 2023, it earned a net profit of Rs. 894.96 cr. on a total income of Rs. 6369.64 cr.

As of December 31, 2023 its net NPAs stood at 1.98%. Its debt equity ratio of 2.64 as of the said date, will rise to 2.65 post this issue. As of the said date, its Rs. 96.81 cr. equity capital was supported by free reserves of Rs. 18180.91cr.

Conclusion / Investment Strategy

This housing finance arm of Indiabulls group brings its 13th debt offer and is coming in a short span after its previous offer which was in the month of December 2023. Considering its AA/Stable ratings from CRISIL and ICRA, investors looking for a steady income may park moderate funds for medium to long-term.

Review By Dilip Davda on March 4, 2024

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 ).

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