India’s third-largest Housing Finance Company, Indiabulls Housing Finance Limited is issuing AA+ rated NCDs from 30 March 2022. They are being issued in eight different series.  The coupon ranges between 8.35% and 9.25% that is much higher than FD rates. They come with different tenures such as 2 years, 3 years, and 5 years. The present bondholders or equity shareholders of Indiabulls are considered Primary Holders. In this IPO, Primary holders will be incentivized by a maximum of 0.25% p.a. This incentive applies only to Retail and HNI categories. Debenture Trustee is IDBI Trusteeship Services Limited and KFin Technologies Private Limited is the Registrar of the issue. The issue will close on 20 April 2022.

IBHFL NCD IPO: Coupon rates and effective yield for each of the series 

Investment Process for IBHFL NCD IPO

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IPO allotment

• IPO will be allotted to you on a first-come, first-serve basis and credited to your Demat account.
• Every individual can submit 5 IPO applications.
• The Demat account must be active.
• After applying for an IPO, you cannot change your contact details such as email id and cell number until allotment.
• If you are paying via UPI, then the UPI mandate must be accepted within 48 hours.

Issue Analysis 

Pros

• The NCDs are AA+ rated securities. AA+rated securities fall into the category of investment grade hence underlying credit risk is assumed to be quite low.
• The coupon rate is between 8.42% to 9.25% that is much higher than (3 to 4%) higher than FD rates.
• Few of the series are secured by the company’s assets.
• India bulls has made a strong presence in India with 130 branches and 8000+ channel partners that can efficiently manage to execute new growth strategies.
• The company is agile in adopting technology to reduce costs and reach the untapped market.

Cons

• The company’s revenue has been reducing for 2 years.
• Loan books are less seasoned because of pandemics.

Company over view

Indiabulls Housing Finance Limited (IBHFL) was founded in 2005. It is headquartered in New Delhi, India. It is the third-largest housing finance company regulated by National Housing Bank. IBHFL is part of the Indiabulls group: IBHFL leads 80% of the group turnover. IBHFL is operating via 125 branches in 92 cities in India. IBHFL has made its presence in the United Kingdom and the United Arab Emirates. Mr. Gagan Banga is leading the IBHFL team as Managing Director of the company.

Financial Performance

Cash flow last 5 years

Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.

• • *Cash flow from operating activities reflects the amount a company generates through its product of services.
  • **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
  • ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

Key Highlights

• Loan disbursed – Rs. 2.84 lakh cr.
• Total loan Disbursed – Rs. 325 cr by September 2021.
• Customer base – 1 million.
• Number of branches – 130 in 92 towns and cities across India.
• Number of channel partners – 8000.

Strengths 

 

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