India’s third-largest Housing Finance Company, Indiabulls Housing Finance Limited is issuing AA-rated NCDs from 6 September 2021. The issue will close by 20 September 2021. They are being issued in ten different series. The coupon ranges between 8.42% and 9.75% that is much higher than FD rates. They come with different tenures such as 2 years, 3 years, 5 years, and 7 years 4 months. 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.
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| Issuer | Indiabulls Housing Finance Limited |
| Type of instrument | Secured or/and unsecured redeemable and non-convertible debentures |
| Listing | The NCDs shall be listed on the BSE Limited (Stock Exchange) after 6 days of the closing date |
| Credit Rating | “AA” by CRISIL |
| Issue Size | Rs. 1000 cr (including GreenShoe Option) |
| Issue Price (in Rs.) | Rs. 1000 per NCD |
| Minimum Investment (in Rs.) | 10,000 |
| Issue Opening Date | September 6, 2021 |
| Issue Closing Date | September 20, 2021 |
| Mode of Issuance | Dematerialized only |
IBHFL NCD IPO: Coupon rates and effective yield for each of the series
| Series | Frequency | Tenure | Coupon Rate | Yield |
| I | Annual | 24 Months | 8.75% | 8.75% |
| II | Cumulative | 24 Months | NA | 8.75% |
| III | Monthly | 24 Months | 8.42% | 8.75% |
| IV | Annual | 36 Months | 9.00% | 9.00% |
| V | Cumulative | 36 Months | NA | 9.00% |
| VI | Monthly | 36 Months | 8.66% | 9.00% |
| VII | Annual | 60 Months | 9.25% | 9.25% |
| VIII | Monthly | 60 Months | 8.89% | 9.25% |
| IX | Annual | 87 Months | 9.75% | 9.75% |
| X | Monthly | 87 Months | 9.35% | 9.35% |
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.
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 9.75% that 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 125 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.
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 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.
- Loan disbursed- Rs. 2.84 lakh Cr
- Customer base – 10 Lakh +
- Number of branches- 125
- Number of channel partners- 8000
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.
(Rs. in crores)
| Particulars | March-2021 | March-2020 | March-2019 |
| Total Assets | 83,472.27 | 92,652.57 | 120,102.71 |
| Total Revenue | 8,654.64 | 11,399.23 | 15,407.35 |
| Profit for the year | 1,058.46 | 2,159.91 | 3,729.26 |
Strengths
Awards
Investment Process for IBHFL NCD IPO
IPOs are facilitated by entities called Lead Managers. Generally, these lead managers are brokerage firms. Investors need to apply for IPO through lead managers, and once the allotment is made, investors will receive the bond units in their Demat account.
You can invest in IPOs via GoldenPi in 3 easy steps.
If the investment amount is less than 10 lakhs
If the investment amount is less than 10 lakhs, retail investors can apply for an IPO online in three simple steps.
- Select the product- Visit GoldenPi.Com and go to the collection page. Visit the IPO section and choose the issuing company. The product page provides information such as a coupon, yield, maturity, and payment frequency. The product page also displays credit rating and issuer details that help investors to make an appropriate decision.
- Decide Investment Amount – Decide the amount you want to invest. You need to select the series and the number of units you want to purchase. The calculator displays the total investment amount.
- Pay via UPI– Now provide UPI handle. You will receive a mandate in the UPI app. Go to the respective UPI app and make payment by approving the mandate.
If the investment amount is more than 10 Lakhs –
A.Fill up the form with the required information.
B.Take a photo of your form and share it with your Relationship Manager for bidding on exchange.
C.Courier the filled up IPO form to our office address as early as possible. The issue closes on the 6th of September, 2021. The earlier you send it, the better it is.
Our Address: IndiQube Orion, Ground Floor,
24th Main Road, Garden Layout, Sector 2,
HSR Layout, Bangalore, Pincode: 560102
To know how to invest in NCD-IPO online, read this blog.
IPO allotment
IPO will be allotted to you on a first-come, first-serve basis and credited to your Demat account.
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 hours.
