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• IHFL is a housing finance arm of Indiabulls group.
• It marked declining trends for its financial performance as well as dividend distribution.
• The issue is aggressively priced based on its financial track record so far.
• The only attraction is staggered calls for RI and the parentage.
• Well-informed investors may park moderate funds for the long term rewards.
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. IHFL pre-dominantly offer housing loans and loans against property to its varied client base which comprises (i) salaried employees; (ii) self-employed individuals; (iii) micro, small and medium-sized enterprises ("MSMEs") and (iv) corporates.
The company 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. As of September 30, 2023, IHFL was among the top 5 housing finance companies in India in terms of asset under management ("AUM"), and its housing loans and non-housing loans constituted 52% and 48%, respectively of Loan Book on a standalone basis.
As on September 30, 2023, its Loan Book was Rs.54340.74 cr. on a consolidated basis. The company is in the process of shifting to an asset-light business model, focusing on co-lending of loans along with banks and an increased sell down of its loan portfolio. Its collateral primarily consists of residential and commercial properties. In addition, as of September 30, 2023, the average ticket size ("ATS") for home loans is Rs.2.5 million and Rs.6.9 million for loans against property.
As of September 30, 2023, the company had a network of 218 branches which gives it a Pan-India presence. As of September 30, 2023, it had a direct sales team of 1745 employees, on a consolidated basis, who were located across its network. Besides in-house sourcing via the direct sales team, it also relies on external channels, such as direct sales agents for referring potential customers. In addition, the company has an online home loans fulfilment platform called e-Home Loans which allows its customers to apply for a home loan and upload the requisite documents online.
As of September 30, 2023, its consolidated borrowings (other than debt securities) were Rs. 28136.11 cr., consolidated debt securities were Rs. 16077.51 cr. and consolidated subordinated liabilities were Rs. 4206.89 cr. the company relies on long-term and medium-term borrowings from banks and other financial institutions, including external commercial borrowings and issuances of non-convertible debentures. It has a diversified lender base, comprising public sector undertakings ("PSUs"), private banks and other financial institutions. It also sells down parts of its portfolio through the securitization and/or direct assignment of loan receivables to various banks and other financial institutions, which is a major source of liquidity for it.
As at September 30, 2023 and March 31, 2023 and 2022, its consolidated gross NPAs as a percentage of consolidated Loan Book were 3.4%, 3.4% and 3.8%, respectively, and consolidated net NPAs (which reflect our gross NPAs less provisions for ECL on NPAs (Stage 3) for the six months ended September 30, 2023 and the years ended March 31, 2023 and 2022, as a percentage of consolidated Loan Book were 1.9%, 2.2% and 2.2%, respectively. As of September 30, 2023, it had ECL allowance on financial assets and loan commitments amounting to Rs. 774.47 cr. on a consolidated basis which is equivalent to 1.4% of Loan Book and 42.3% of gross NPAs. As of September 30, 2023, we had a dedicated workforce of 4,956 employees.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 246226515 equity shares of Rs. 2 at a fixed price of Rs. 150 per share to mobilize Rs. 3693.40 cr. The RI is opening for subscription on February 07, 2024, and will close on February 13, 2024. The company is offering RI in the ratio of 1 for 2 to its eligible stakeholders as of the record date of February 01, 2024. The company is asking Rs. 50 per share (33.33%) as application money and the rest is to be paid on additional call money as and when decided the company. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 119.40 cr. for this RI process and from the net proceeds, it will utilize Rs. 2734.11 cr. for augmenting its capital base, and Rs. 839.89 cr. for general corporate purposes.
This RI is jointly lead managed by Nuvama Wealth Management Ltd., and InCred Capital Wealth Portfolio Managers Pvt. Ltd., while KFIn Technologies Ltd. is the registrar of the issue.
Post RI, company's current paid-up equity capital of Rs. 98.49 cr. will stand enhanced to Rs. 167.51 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 12563.44 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 10030.12 cr. / Rs. 1201.59 cr. (FY21), Rs. 8993.90 cr. / Rs. 1177.74 cr. (FY22), Rs. 8725.79 cr. / Rs. 1127.68 cr. For H1 of FY24 ended on September 23, 2023, it earned a net profit of Rs. 594.17 cr. on a total income of Rs. 4157.92 cr. Thus it has posted de-growth in its top and bottom lines for the last three fiscals.
DIVIDEND POLICY:
The company has declared dividends of 2000% (FY19), 1550% (FY20), 450% m(FY21) and 62.50% (FY23). Its dividend distribution posted declining trends. It will continue a prudent dividend policy based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 535789 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 221.95 on January 31, 2024, and opened on an ex-right basis at Rs. 198.85 on February 01, 2024. Since then, it has marked a high/low of Rs. 200.90 / Rs. 184.65. The scrip last closed at Rs. 189.45 as of February 02, 2024. For the last 52 weeks' it has posted a high/low of Rs. 209.58 / Rs. 81.89.
The company has no promoters' holding. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on February 4, 2024
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 ).
The Indiabulls Housing Finance Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Indiabulls Housing Finance Rights Issue 2024 worth investing. The Indiabulls Housing Finance Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Indiabulls Housing Finance Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Indiabulls Housing Finance Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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