About Company:
Tata Capital Housing Finance Ltd. (TCHFL) is one of India's leading non-deposit taking housing finance companies registered with the NHB. It was incorporated in 2008 as a wholly-owned subsidiary of TCL and accordingly is a part of the Tata Capital Group which is part of the larger Tata group.
TCHFL focuses primarily on providing affordable home loans, home equity and construction finance. For Fiscal 2019, it made total loan disbursements of Rs. 11101.11 cr. As of September 30, 2019, its gross Non-Performing Assets ('NPAs') in terms of value and as a percentage of outstanding loans were Rs. 400.59 cr. or 1.45 %, respectively and net NPAs in terms of value and as a percentage of our net outstanding loans were Rs. 145.06 cr. or 0.53 %, respectively.
Since 2009, it has grown to become one of the key HFC in India based on loans and advances from financing activity of Rs. 27838.75 cr. as of September 30, 2019. It has a strong marketing and distribution network in 88 branches throughout India as of September 30, 2019. Its network provides with a pan-India presence across Tier I, Tier II and Tier III cities in India. Credit decisions are taken in accordance with the defined internal parameters and procedures. It also relies on external channels such as direct sales agents for referring potential customers.
TCHFL's focus growth areas for the business are (i) affordable housing through increasing its reach into Tier II and Tier III cities, (ii) developing partnerships with property developers, (iii) leveraging the 'Tata' brand and (iv) increasing utilization of alternate business channels, including digital platforms.
Debt Offer Details:
For the purpose of onward lending, financing and for repayment/prepayment of interest and principal of existing borrowings (75% of fund mobilized) as well as general corpus fund need (25% of fund mobilized), TCHFL is coming out with debt offer of Secured and/or Unsecured subordinated Redeemable Non-Convertible Debentures of Rs. 1000 each for Rs. 500 crore with a green shoe option to retain oversubscription up to Rs. 1500 cr. making the overall issue size of Rs. 2000 cr. . It has an overall shelf limit up to Rs. 5000 crore.
Issue opens for subscription on 07.01.2020 and will close on or before 17.01.2020. Minimum application is to be made 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. Allotment will be done on 'First come-first served' basis. Application is to be made in ASBA mode only. This is the maiden debt offer from the company. The company will be spending Rs. 20.75 crore to mobilize Rs. 2000 cr.
This issue is rated as CRISIL AAA/Stable by CRISIL, ICRA AAA/Stable by ICRA. This rating indicates highest degree of safety regarding timely servicing of financial obligations and carry very low credit risk.
Issue is jointly lead managed by Edelweiss Financial Services Ltd. and A K Capital Services Ltd. While IDBI Trusteeship Services Ltd. is the debenture trustee KFin Technologies Pvt. Ltd. (Erstwhile Karvy Fintech Pvt. Ltd.) is the registrar to the issue.
These NCDs have tenures of 36 months, 60 months, 96 months and 120 months. It offers coupon rates ranging from 8.00% to 8.55% based on the choice of investors. Frequency of interest payments will be monthly or annually as per the choice of investors. For Unsecured category of 120 months, TCHFL offers coupon rate of 8.70% p.a.
| Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 | |
|---|---|---|---|---|---|---|
| Type of NCD | Secured | Secured | Secured | Secured | Secured | Unsecured |
| Minimum Application | Rs 10,000 (10 NCDs) across all Series | |||||
| Face Value/ Issue Price of NCDs | Rs 1,000 | |||||
| In Multiples of thereafter (Rs ) | Rs 1,000 (1 NCD) | |||||
| Frequency of Interest Payment | Annually | Monthly | Annually | Monthly | Annually | Annually |
| Tenor | 36 Months | 60 Months | 60 Months | 96 Months | 96 Months | 120 Months |
| Coupon Rate (Retail) for Category I & II | 8.00% | 7.92% | 8.20% | 8.01% | 8.30% | 8.55% |
| Coupon Rate (Retail) for Category III & IV | 8.10% | 8.01% | 8.30% | 8.10% | 8.40% | 8.70% |
| Effective Yield for Category I & II | 7.99% | 8.21% | 8.19% | 8.30% | 8.29% | 8.54% |
| Effective Yield for Category III & IV | 8.09% | 8.30% | 8.29% | 8.40% | 8.39% | 8.69% |
| Amount on Maturity | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 |
Financial Data:
TCHFL has posted total revenue/net profits of Rs. 2440.01 cr. / Rs. 50.49 cr. (FY19). For the H1 of FY20 it has earned net profit of Rs. 23.70 cr. on total revenue of Rs. 1494.89 cr. As on 30.09.19 it's paid up equity capital of Rs. 309.71 cr. has a support of free reserves of Rs. 697.99 cr. On the said date it's Tier-I capital adequacy ratio stood at 13.06%. Its Gross and Net NPAs stood at 1.45% and 0.53% on 30.09.19.
Its current debt equity ratio of 9.93 will stand enhanced to 11.93 post issue of Rs. 5000 cr. of debt instruments. This is raising a bit concern.
Review By Dilip Davda on January 1, 2020
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.
