Reliance Home Finance Ltd (RHFL) is a wholly-owned subsidiary of Reliance Capital Ltd and is engaged in lower-middle and middle-income group housing finance segment. It is registered with National Housing Bank (NHB).
For the purpose of onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company, it is coming out with a maiden NCDs (of Rs. 1000 each) issue of Rs. 3500 crore shelf limit. The base amount is Rs. 1000 crore Secured NCDs and the greenshoe option is Rs. 2000 crore for secured NCDs and Rs. 500 crore for Un-Secured NCDs. Quota reserved for QIBs (30%), Corporate (10%), HNIs (30%) and Retail (30%). The company offers coupon rates ranging from 8.70 per cent to 9.15 per cent depending upon tenure of 3, 5 and 10 yrs. For 15 years NCDs it will offer 0.25 step-up incentives in absence of call option after 10 years term that will be under unsecured category. Secured NCDs does not have Step-Up/Step-Down options. NCDs are available in demat and physical mode, however, trading will take place only in demat mode. Minimum application is to be made for 10 NCDs (Rs. 10000) and in multiples of 1 NCD thereon, thereafter. Interest will be paid on Annual basis for all options. Issue opens for subscription on 22.12.16 and will close on or before January 06, 2017. Post allotment, NCDs will be listed on BSE and NSE.
Secured NCDs up to Rs. 3000 crore is graded AA+/Stable by CARE and BWR and Un-Secured NCDs up to Rs. 500 crore is graded AA/Stable by CARE and BWR (indicating that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk) Lead managers to the issue are Edelweiss Financial Services Ltd, A K Capital Services Ltd, Axis Bank Ltd., Trust Investment Advisors Pvt Ltd and Yes Securities (India) Ltd. IDBI Trusteeship Services Ltd is the Debenture Trustee and Karvy Computershare Pvt Ltd is the registrar to the issue.
Housing Finance sector is expected to show CAGR of around 18-20 per cent till 2020 and RHFL that has shown CAGR of 24 per cent plus for revenues and CAGR of 36 per cent for profit before tax is hopeful of maintaining the same. It has NPA around 1.2 per cent and is doing a business with a spread of around 3.7 per cent. As at 30.09.16, RHFL had AUM of Rs. 9383 crore spread at 100 locations through 43 branches.
Conclusion: Offers with "AA+/AA" ratings is preferred by investors in debt market. Hence this offer is worth considering for investment for steady interest income.
Review By Dilip Davda on December 9, 2019
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.
