A Comprehensive Guide of Indiabulls Housing Finance Limited NCD IPO 2023

In the dynamic landscape of financial markets, investors often seek avenues that offer a balance between risk and returns. The recent offering by Indiabulls Housing Finance Limited (IBHFL) in the form of Non-Convertible Debentures (NCDs) has garnered attention. In this article, we will delve into the key details, credit rating, risks, and investor eligibility, shedding light on both the strengths and weaknesses of this financial instrument. Additionally, we’ll explore how BondsIndia serves as a valuable platform for investors to engage with this IPO.

Key Details of the Indiabulls Housing Finance NCD IPO 2023:

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Opening and Closing Dates:

The NCD issue is set to open on December 7, 2023, and will conclude on December 20, 2023. Investors have a window of opportunity to participate during this period.

Issue Size and Nature of the Instrument:

With a base issue of Rs. 100 Crores and a Green Shoe option of Rs. 100 Crores, aggregating up to Rs. 200 Crores, the NCDs are secured, redeemable, and non-convertible debentures. The face value of each NCD is Rs. 1,000.

Rating and Yield:

CRISIL AA Stable & ICRA AA Stable ratings provide a snapshot of the creditworthiness. The NCDs offer an attractive yield of up to 10.24% + 0.50%, catering to both Category 3 and Category 4 investors.

Listing and Allotment:

The NCDs will be listed on NSE and BSE, with the listing scheduled for December 28, 2023. Allotment will occur on December 27, 2023.

Credit Rating:

Indiabulls Housing Finance Ltd exhibits robust credit strengths:

1. Strong Capitalization: The company boasts a healthy cover for asset-side risks, having raised significant capital, including Rs 683 crores through qualified institutional placement in fiscal 2021. The proposed capital raising further fortifies the company’s medium-term financial risk profile.
2. Comfortable Asset Quality: Despite the challenges posed by the second wave of COVID-19, IBHFL maintains a comfortable asset quality in retail segments. Prudent risk-mitigating measures, such as conservative loan-to-value ratios, contribute to stability.
   

Risks Involved:

1. Susceptibility to Commercial Real Estate Risks: The commercial credit portfolio, while decreasing as a percentage of overall AUM, remains sizable. Asset-quality risks stemming from large-ticket loans in the commercial real estate segment could impact portfolio performance.
2. Credit Risk: The company’s vulnerability to credit risk is highlighted, especially if there is a significant increase in NPAs, particularly in the commercial credit portfolio. The impact on profitability is a critical factor to monitor.
   

Investor Eligibility:

The NCDs cater to a diverse set of investors:

1. Institutional Investors: Allocated 30% of the base issue, providing an opportunity for institutional participation.
2. Non-Institutional Investors:  Allocated 10% of the base issue, accommodating a range of non-institutional investors.
3. High Net Worth Individuals (HNIs):  With a 30% allocation, HNIs can tap into this investment avenue.
4. Retail Individual Investors:  A substantial 30% allocation is reserved for retail individual investors, making it accessible to the general public.
   

Credit Strengths and Weaknesses:

Strengths:

1. Demonstrated Capital Raising Ability: IBHFL’s track record of successfully raising capital enhances its financial resilience.
2. Diversified Product Offering: The company’s focus on housing loans, loans against property, and mortgage loans to real estate developers showcases a diversified product portfolio.

Weaknesses:

1. Commercial Real Estate Portfolio Risks: The persistence of asset-quality risks in the commercial real estate portfolio poses a potential challenge.
2. Impact of External Factors: External factors, such as economic downturns or unforeseen events, could impact the financial health of the company.

Connecting BondsIndia with IPO:

BondsIndia serves as a bridge between investors and the Indiabulls Housing Finance NCD offering:

1. User-Friendly Platform: BondsIndia provides a seamless and user-friendly platform for investors to access information about the NCD, understand its intricacies, and make informed investment decisions.
2. Application Convenience: Investors can easily navigate the application process through the BondsIndia platform, streamlining the bidding process.
3. Information Repository: BondsIndia acts as a repository of essential information, ensuring investors have access to the latest updates and insights related to the NCD.

In conclusion, the Indiabulls Housing Finance NCD presents a compelling investment opportunity with attractive yields, balanced by robust credit strengths. However, investors must remain vigilant about the associated risks. BondsIndia, through its user-friendly interface and comprehensive information, empowers investors to navigate the intricacies of the IPO and make informed investment decisions. As with any financial decision, conducting thorough research and seeking professional advice is paramount to making sound investment choices.