INDIABULLS HOUSING FINANCE LIMITED-NCD IPO – September 2022, Should you invest?

High Yield  |  AA/Stable  |  Minimum Investment: 10k Only

India’s third-largest Housing Finance Company, Indiabulls Housing Finance Limited is issuing AA/Stable rated NCDs from 5th September 2022. They are being issued in eight different series.  The coupon ranges between 8.65% and 9.55% which 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. The issue will close on 22 September 2022

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

Allocation Ratio

Investment Process for IBHFL NCD IPO

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If the investment amount is  less than & up to 10 lakhs, retail investors can apply for an IPO online.

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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. 

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 coupon rate is between 8.65% to 9.55% which is much higher than (3 to 4%) higher than FD rates.
• Few of the series are secured by the company’s assets. 
• 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

• All of the series are not secured.
• The company’s revenue has been reducing for 2 years. 
• Loan books are less seasoned because of pandemics.

Dos and Don’ts of Indiabulls NCD-IPO

• Every individual can submit 5 IPO applications. 
• The Demat account must be active. 
• After applying for an IPO, you can not 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 hour

Company overview

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 Overview 

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.

Financial Performance

Pandemic has hit the company’s performance hence annual revenue has reduced. The company is agile in adopting technology. It has an end-to-end digitalized home loan. With the help of digital assets, the company is trying to make a presence in tier-3 and tier-4 locations.

Ratio Analysis

Key Highlights

• CRAR for 9M FY22 – 31.2%
• Loan disbursed- Rs. 2.84 lakh Cr
• Customer base – 10 Lakh +
• Number of branches- 130
• Number of channel partners- 8000
• Since September 2018, the debt of almost 88,000 crores has been serviced on a gross basis. 
• Net gearing has decreased from levels of 7x to under 3x.
• On target to cut the wholesale book in half by December 22 and by 33% by March 22 [on numbers from March 21]
• No new, distinct structured arrangements are necessary for the creation of liquidity. 45% of the investment for structured capital from deals that were finalised a year ago. Proof of the reliability and availability of wholesale loan assets.
• As additional books begin to be added, net gearing will stabilise between 2 and 2.5 times. will stay steady at these levels as an additional business is conducted using an approach that prioritises light assets.

9M FY 2022

• Net NPA- 1.80%
• Balance Sheet- Rs. 82,285 Cr
• Net Worth- Rs. 16,405 Cr
• Asset Under Management- Rs. 73,914 Cr
• Loan Book- Rs. 60,979 Cr
• Borrowings- Rs. 55,361 Cr
• PAT – Rs. 303 Cr

Strengths 

• Strong Capital Adequacy
• Low Gearing
• Healthy Liquidity & Matched ALM
• Stable Asset Quality

To get better returns than Bank FDs, invest in NCD-IPOs online. 

Previous NCD IPO from Indiabulls Housing Finance

• New IPO: INDIABULLS HOUSING FINANCE NCD – March 2022. Should you invest?
• Indiabulls Housing Finance Limited NCD-IPO: September, 2021, should you invest?

About GoldenPi Expert

Abhijit Roy | CEO & CO-Founder GoldenPi

With over 15 years of experience across fixed income and debt markets, he brings deep domain expertise along with a strong focus on investor education and transparency. An alumnus of IIT Kharagpur and IIM Calcutta, his views are personal and should not be considered investment advice.

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