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IndiaBulls NCD 2021 Offers 9.75% Interest Rate: Check If This Investment Is Suitable For You

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NCD or non convertible debenture is a debt instrument issued by the company for mopping up funds from the public and in return they provide some return or coupon rate. The product or the investment option is referred as NCD because the debt component cannot be converted into equity. So, here are checkpoints listed to help you ascertain whether this fixed instrument option shall be apt or not for your investment goals:

 
IndiaBulls NCD 2021 Offers 9.75% Rate: Check If The Investment Suits You

About the company: Indiabulls Housing Finance is among the leading housing financiers in the country on the basis of AUM. The company works under the ambit of National Housing Bank. The company's primary focus is on long term secured mortgaged backed loans, with major loan book comprising of secured loans. In the housing segment, the company offers home loan, LAP as well as mortgage loans to developers.

Issue details:

Nature of instrument: Secured & Unsecured Subordinated Redeemable

Issue size: Base Issue of Rs. 200 Cr. with an option to over subscribe up to Rs. 800 Cr. aggregating to Rs. 1000 Cr.

Minimum application: Rs. 10,000 (10 NCD) and in multiples of Rs. 1000 (1 NCD) thereafter

Stock Exchange for Listing: BSE & NSE

Credit Rating CRISIL AA/Stable & BWR AA+ Negative

Mode of Allotment and Trading First Come First Serve Only

Issue objective: Through the proceeds, the housing finance company will go ahead with its onward lending, financing, and for repayment of interest and principal of current borrowings; and for general corporate purposes.

Coupon rate: Here in unsecured NCD comes with a lock in period of 87 months or over 7 years. And the highest coupon rate of 9.75% is pegged for unsecured NCDs.

SeriesSeries 1Series 2Series 3Series 4Series 5Series 6Series 7Series 8Series 9Series 10
Tenor24 Months24 Months24 Months36 Months36 Months36 Months60 Months60 Months87 Months87 Months
Type of InstrumentSecured NCDs Unsecured NCDs
Frequency of Interest PaymentAnnualCumulativeMonthlyAnnualCumulativeMonthlyAnnualMonthlyAnnualMonthly
Coupon Rate (Retail)8.75%NA8.42%9.00%NA8.66%9.25%8.89%9.75%9.35%
Effective Yield (%)8.75%8.75%8.75%9.00%9.00%9.00%9.25%9.25%9.75%9.75%
Amount on MaturityRs 1,000.00Rs 1,182.70Rs 1,000.00Rs 1,000.00Rs 1,295.35Rs 1,000.00Rs 1,000.00Rs 1,000.00Rs 1,000.00Rs 1,000.00

Credit rating: Credit rating is another criteria to judge an NCD and this open NCD commands a good rating. Nonetheless the credit rating can change over time depending on the financials and other aspects associated with the issuer of the NCD.

 

Conclusion: This is a unique NCD issue with both secured and unsecured component and so here unsecured component of the issue will pose risk for the investors in case of financial unease at the company. And now if your risk appetite allows you still can go with the secured option only for higher returns and avoid unsecured option altogether. This is also being said on the rationale that company's financials are in a declining trend so we may see it defaulting on interest payment etc. Also, there is Covid impact which has disrputed business across verticals, with HFCs not an exception.

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