ABOUT COMPANY:
Piramal Capital & Housing Finance Ltd. (PCHFL) is a wholly owned subsidiary of Piramal Enterprises Limited ('PEL') which is the flagship company of the Piramal Group. It is registered as a non-deposit taking housing finance company with the National Housing Bank (NHB) and is engaged in various financial services businesses. PCHFL provides both wholesale funding opportunities to real estate developers, corporates and SMEs across sectors and retail funding opportunities including housing finance to individual customers.
In addition to wholesale lending its business also focuses on retail lending with a differentiated approach towards risk optimized profitability. Under retail lending the company offers housing finance, LAP, secured business loans, digital purchase finance and digital personal loans. It provides financing in the housing industry to existing home owners and new home buyers. The company also provides construction finance for residential and commercial projects, and financing to large and mid-sized corporate clients. In real estate, the platform provides financing solutions such as structured debt, construction finance and lease rental discounting to developers and housing finance to home buyers.
The wholesale business in non-real estate sector includes separate verticals for the corporate finance group ('CFG') and emerging corporate lending ('ECL'). CFG provides customized funding solutions to companies across sectors such as infrastructure, renewable energy, industrials, and auto components, while ECL focuses on providing lending services to Small and Medium Enterprises ('SME(s)').
As on March 31, 2021, it had 17 permanent branches located in various cities across India. The company has a 'hub-and-spoke' model, with physical branches serving as its hub locations and technology-led spoke locations. Its AUM as of March 31, 2021 stood at Rs. 32353.56 cr. Its retail housing portfolio grew from 4% in fiscal 2018 to 13.7% in fiscal 2021 of its overall loan book.
The housing finance industry in India is highly competitive. PCHFL faces competition from domestic and international banks as well as other HFCs for corporate advances and housing loans. Since it has mix of wholesale and retail loans, its primary competition is with other NBFCs and HFCs offering similar products and services.
ISSUE DETAILS:
The company is coming out with a maiden debt offer of secured, rated, listed, redeemable non-convertible debentures of face value of Rs. 1000 each for an amount of Rs. 200 cr. with an option to retain oversubscription up to Rs. 800 cr., thus making the overall issue size of Rs. 1000 cr. under Tranche-1. It has a shelf limit of Rs. 2000 cr. This debt offer opens for subscription on July 12, 2021, and will close on or before July 23, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000.00) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE.
PCHFL will be spending Rs. 10.28 cr. for mobilizing Rs. 1000 crore of debt fund. From the net proceeds, it will use at least 75%for the purpose of onward lending, financing and for repayment/prepayment of interest and principal of existing borrowings and up to 25% for general corporate purpose.
This debt offer is jointly lead managed by A K Capital Services Ltd., Edelweiss Financial Services Ltd., JM Financial Ltd., Trust Investment Advisors Pvt. Ltd., while Link Intime India Pvt. Ltd. is the registrar to the issue. IDBI Trusteeship Services Ltd. is the debenture trustee.
This debt offer has tenure of 26 months, 36 months, 60 months and 120 months and is offering coupon rates ranging from 8.10% to 9.00%. It offers interest payment on annual and cumulative basis as per the scheme preferred by investors. It has allocated 10% for Institutions, 10% for non-institutions, 40% for HNIs and 40% for retail investors.
This offer is rated CARE/AA (CWD) by CARE Ratings Ltd. and ICRA/AA (outlook Negative) by ICRA Ltd. CARE rating is on the basis of CWD i.e. Under Credit Watch with Developing implications. Both these ratings may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, PCHFL has posted total income/net profit of Rs. 5571.86 cr. / Rs. 1442.58 cr. (FAY19), Rs. 5622.61 cr. / Rs. 32.46 cr. (FY20) and Rs. 5087.90 cr. / Rs. 1034.44 cr. (FY21). This shows inconsistency in its top and bottom lines for all these three fiscals.
As of March 31, 2021, its net NPA stood at 1.90% against 0.14% as of March 31, 2019. Its current debt equity ratio of 1.39 (as of March 31, 2021) will stand enhanced to 1.48 post this issue.
Review By Dilip Davda on July 4, 2021
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
