High Yield | AA/Stable | Minimum Investment: 10k Only
India’s one of the largest Housing Finance Company, Indiabulls Housing Finance Limited is issuing AA/Stable rated NCDs from 5th March 2024. They are being issued in twelve different series. The coupon ranges between 8.88% and 10.75% which is much higher than FD rates. They come with different tenures such as 24, 36, 60, 84 and 120 months.
IBHFL NCD IPO: Coupon Rates and Effective Yield for Each of the Series
Principal Redemption Schedule and Redemption Amounts
Allocation Ratio
The allocation ratio of IBHFL NCD IPO is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI. Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for IBHFL NCD-IPO.
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Financial Overview
Snapshot stating the Revenue, Expenses, EBIT and PAT
(All Values are in Rs. Cr.)
Cash Flow of last 5 years
(All Values are in Rs. Cr.)
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
Issue Analysis
Pros
- The NCDs are AA/Stable rated securities. AA/Stable-rated securities fall into the category of investment grade hence underlying credit risk is assumed to be quite low.
- The effective yield is between 9.25% to 10.75% which is much higher than (3 to 4%) higher than FD rates.
- In this IPO, Primary holders will be incentivized by a maximum of 0.25% p.a.
- Indiabulls 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 decreasing for the past 3 years.
- Loan books are less seasoned because of pandemics.
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About Indiabulls Housing Finance Limited
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 the 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.
Strengths
- Strong Capital Adequacy
- Low Gearing
- Healthy Liquidity & Matched ALM
- Stable Asset Quality
Key Points
- IBHFL focuses on retail mortgage financing, with housing loans accounting for 72% of its total AUM (as of June 2023).
Capitalization:
- Strong net worth (₹17,576 crore) and healthy internal cash flow.
- Comfortable coverage for non-performing assets (NPA): 15.7x net worth.
- Solid capital adequacy ratios (CAR): Tier-1 at 26.7%, overall at 31.2%.
Asset Quality:
- Stable retail asset quality: GNPAs at 2.87%.
- Improvement in developer loan book: GNPAs declined to 9.06%.
Liquidity:
- Strong liquidity profile with positive cash flow mismatch for the next year.
- Reduced reliance on short-term funding (no commercial paper as of June 2023).
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Source – Tranche V Prospectus February 27, 2024
Disclaimer – The information is published as on date 04/03/2024 based on information available on Tranche V Prospectus February 27, 2024. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors
