Indiabulls Housing Finance Ltd. has announced the launch of a public issue of secured and/or unsecured non-convertible debentures (NCDs), offering coupon rates ranging from 8.05% to 9.75% per annum. The base size of installment I of the issue is ₹200 Cr with greenshoe option up to ₹800 crores, in total ₹1,000 crores.
The issue, which will be open for subscription during September 6-20, has been rated AA by Crisil Ratings Ltd with a stable outlook and AA+ with negative outlook by Brickworks Ratings Pvt Ltd.
There are 10 series of NCDs available with a fixed coupon and tenures of 24 months, 36 months, 60 months and 87 months with yearly, monthly and cumulative payment options.
The issue is divided into two parts – secure and unsecured. The secured portion of the NCD will be backed by current and future receivables and current assets company, whereas no security will be created for unsecured NCDs.
According to experts, unsecured NCDs are riskier than secured NCDs as the bonds are not backed by the assets of the company.
Secured NCDs will have a tenure of 24 months, 36 months and 60 months, while unsecured NCDs will have a lock-in period of 87 months. Further, the highest coupon payout will be 9.25% under the secured option and 9.75% under the unsecured series.
Under the issue, 30% each of the total issue size has been reserved for retail, HNI and institutional investor categories, with 10% quota for non-institutional investor category.
“The ratings are quite good and even the coupon rate is attractive. Also, there is no long-term lock-in in the safe option. Hence, I would suggest investors to stay away from unsecured investments as the company’s profits are declining and may get affected by the lockdown in the last 18 months. Harshad Chetanwala, SEBI registered investment advisor and co-founder of MyWealthGrowth said, “Investors who have reasonable risk appetite can go for it from the return perspective and that too only in the safe portion.”
“For retail investors with moderate risk appetite, the mutual fund route would be a better option,” he added.
The NCDs are proposed to be listed on BSE and NSE and most of the proceeds will be used for on-lending, financing, and repayment of interest and principal of existing borrowings.
Indiabulls Housing Finance is one of the largest housing finance companies in India and has an Asset Under Management (AUM) ₹79,213 crore with over one million subscribers as of 30 June 2021.
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