Indiabulls Commercial Credit Limited NCD Company Profile:
Indiabulls Housing Finance Limited (“IBHFL”) is a non-deposit-taking housing finance company (“HFC”) registered with the National Housing Board (“NHB”). It is also a notified financial institution under the SARFAESI Act. IBHFL focuses primarily on long-term secured mortgage-backed loans. IBHFL primarily offers housing loans and loans against property to a target client base of salaried and self-employed individuals and micro, small and medium-sized enterprises (“MSMEs”) and corporates. It also offers mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance for the construction of residential premises. As on March 31, 2022, the company’s Loan Book was ₹61,589.26 crore and as on December 31, 2022, the company’s Loan Book was ₹53,922.14 crore, on a consolidated basis.
Indiabulls Housing Finance Limited (“IBHFL”) is coming out with a public issue of secured redeemable non-convertible debentures of the face value of Rs 1,000 each, (“NCDs”), for an amount up to ₹100 crores (“Base Issue Size”) a green shoe option of ₹800 crores aggregating up to ₹900 crores as per Tranche V Issue. The Issue offers yields ranging from 9.25% to 10.15% depending upon the Category of Investor and the Series applied for. The Tranche V Issue shall be open from Friday, 3rd March 2023, to Friday, 17th March 2023, with an option to close earlier and/or extend up to a period as may be determined by the Securities Issuance Committee. A minimum of 75% of the Net Proceeds raised through this Tranche V Issue will be utilized for the purpose of onward lending, financing, and repayment of interest and principal of existing borrowings of the Company, and the remaining 25% for general corporate purposes.
Indiabulls Commercial Credit Limited NCD Details:
| Tranche V Issue opens: | 3rd March 2023 | ||||
| Tranche V Issue closes: | 17th March 2023 | ||||
| Allotment: | On a date, priority basis except on the day of oversubscription and thereafter, if any. | ||||
| Face Value: | Rs.1,000 per NCD | ||||
| Nature of Instrument: | Secured Redeemable Non-Convertible Debentures | ||||
| Minimum Application: | 10 NCDs (Rs.10, 000) & in multiple of 1NCD | ||||
| Listing: | Proposed on BSE and NSE. BSE shall be the Designated Stock Exchange for the Tranche IV Issue | ||||
| Credit Rating | CRISIL AA/Stable” (pronounced as CRISIL double A rating with stable outlook), by CRISIL Ratings Limited and “[ICRA] AA (Stable)” (pronounced as ICRA double A rating with a stable outlook) by ICRA Limited | ||||
| Tranche-V Issue Size | face value of ₹1,000 each (“NCDs”) for an amount up to ₹100 crores (“Base Issue Size”) with a green shoe option of ₹ 800 crores aggregating up to ₹ 900 crores. | ||||
| Listing: | BSE & NSE | ||||
| Depositories | NSDL and CDSL | ||||
| Category | I – Institutional (“QIB”) | II – Non-Institutional (“Corporates”) | II – High Net worth
Individual (“HNI”) (Amount aggregating to above ₹ 10 lakh) |
II – Retail Individual (“Retail”) (Amount aggregating up to and including ₹ 10 lakh) | |
| Category Allocation of the overall Issue Size | 30% | 10% | 30% | 30% | |
| Amount in Crs. | 270 cr. | 90cr. | 270cr. | 270cr. | |
Indiabulls Commercial Credit Limited NCD
Application form
Indiabulls Commercial Credit Limited NCD Specific Terms of the Prospectus:
The terms of the NCDs offered under the Issue are as follows
| Series | I | II | III | IV | V | VI | VII | VIII |
| Frequency of Interest Payment | Annual | Monthly | Cumulative | Annual | Monthly | Cumulative | Annual | Monthly |
| Tenor | 24 Months | 24 Months | 24 Months | 36 Months | 36 Months | 36 Months | 60 Months | 60 Months |
| Coupon Rate (% p.a.) for : | ||||||||
| Category I, & II | 9.25% | 8.88% | NA | 9.40% | 9.02% | NA | 9.65% | 9.25% |
| Category III & IV | 9.65% | 9.25% | NA | 9.90% | 9.48% | NA | 10.15% | 9.71% |
| Effective Yield (% p.a.) for : | ||||||||
| Category I & II | 9.24% | 9.24% | 9.25% | 9.39% | 9.39% | 9.40% | 9.64% | 9.64% |
| Category III & IV | 9.64% | 9.64% | 9.65% | 9.88% | 9.89% | 9.90% | 10.14% | 10.15% |
| Amount (₹ / NCD) on Maturity for : | ||||||||
| Category I & II | ₹ 1,000 | ₹ 1,000 | ₹ 1,193.85 | Staggered Redemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st Anniversary** until Maturity | Staggered Redemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st Anniversary** until Maturity | ₹ 1,309.70 | Staggered Redemption in Five (5) annual payments of ₹200 each, starting from 1 st Anniversary **until Maturity | Staggered Redemption in Five (5) annual payments of ₹200 each, starting from 1st Anniversary ** until Maturity |
| Category III & IV | ₹ 1,000 | ₹ 1,000 | ₹ 1,202.65 | Staggered Redemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st Anniversary** until Maturity | Staggered Redemption in Three (3) annual payments of ₹ 333 for year 1, ₹ 333 for year 2 and ₹ 334 for year 3 starting from 1st Anniversary** until Maturity | ₹ 1,327.75 | Staggered Redemption in Five (5) annual payments of ₹200 each, starting from 1st Anniversary** until Maturity | Staggered Redemption in Five (5) annual payments of ₹200 each, starting from 1st Anniversary** until Maturity |
*-The Company shall allocate and allot Series IV NCDs wherein the Applicants have not indicated the choice of the relevant NCD Series.
Indiabulls Commercial Credit Limited NCD Credit strengths:
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As on December 31, 2021, the housing loan AUM stood at ~Rs. 52,340 crore compared to ~Rs. 78,600 crore as on September 30, 2018. This was because of the subdued disbursements starting Q3 FY2019 with the onset of the liquidity crisis for the sector. IBHFL remains one of the top HFCs in the country, despite the decline in the housing loan AUM. The share of the housing loan segment in the company’s AUM stood increased at 71% as of December 31, 2021 compared to 61% as on September 30, 2018. This is due to the sharp decline in the commercial credit AUM during this period. Going forward, IBHFL’s loan book is expected to remain range-bound as disbursements are unlikely to exceed collections over the near term.
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The improvement in the CRAR in FY2021 was supported by the fresh equity raise of ~Rs. 683 crore and the sale of a stake in OakNorth Holdings for ~Rs. 1,988 crore. IBHFL sold a further stake in OakNorth Holdings for ~Rs. 278 crore, in H1 FY2022. The company’s gearing stood at 3.4 times as on December 31, 2021, compared to 4.1 times as on March 31, 2021, and 4.9 times as on March 31, 2020. Adjusting the cash and bank balances and investments, the net gearing stood lower at 2.8 times as on December 31, 2021, compared to 3.3 times as on March 31, 2021.
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The company has long-term credit ratings of “AA; Stable” from CRISIL, “AA; Negative” from CARE Ratings Limited (“CARE Ratings”), and “BWR AA+ /Stable” from Brickwork Ratings India Private Limited (“Brickwork”) (for the long-term loans and non-convertible debentures) and “[ICRA]AA (Stable)” from ICRA (for our retail nonconvertible debentures). Additionally, we have a credit rating of “AA; Stable” from CRISIL, “AA; Negative” from CARE Ratings, and “BWR AA+ /Stable” from Brickwork in relation to the subordinated debt programme. We also have a credit rating of “CRISIL A1+” from CRISIL, “CARE A1+” from CARE Ratings, and “BWR A1+” from Brickwork in relation to our commercial paper borrowing. The company’s strong financial record and high credit ratings position it to take advantage of the growth in the NBFC industry, provide it with significant competitive advantages, contribute to the growth of our business, and provide a high degree of comfort to our stakeholders.
Indiabulls Commercial Credit Limited NCD Credit challenges:
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The commercial credit book includes lease rental discounting (LRD) loans to builders and construction finance. Given the large ticket size and the high inherent risks associated with these exposures, the commercial credit book remains exposed to concentration risks. The increased challenges for the real estate sector due to the pandemic-related lockdowns heightened the portfolio vulnerability
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ICRA expects IBHFL’s profitability to remain subdued (RoA in the range of 1.0- 1.5%) over the near term, given the existing challenges in terms of growth and credit costs. ICRA notes that the company is in the process of transitioning to a new business model with a focus on retail loans originating through a mix of channels such as co-origination and origination for sell-down. The company’s ability to realize these plans and achieve material scale and profitability would remain critical from a credit perspective.
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The company also faces prepayment risk, given the possibility of debt acceleration upon the breach of covenants, including financial covenants, operating covenants, and rating-linked covenants. Upon failure to meet the covenants, if IBHFL is not able to get waivers from the lenders/investors or the lenders/investors do not provide adequate time to arrange for alternative funding to pay off the accelerated loans, the rating could face pressure.
Registrar to the Issue:
KFIN TECHNOLOGIES LIMITED
Selenium, Tower B, Plot No- 31 and 32, Financial District, Nanakramguda, Serilingampally, Hyderabad,
Rangareddi 500 032, Telangana, India.
Telephone No.: +91 40 6716 2222
Email: iccl.ncdipo@kfintech.com
Contact Person: Mr. M. Murali Krishna
Website: www.kfintech.com