7 Sept 2021

Indiabull Housing Finance Public Debt Issue analysis

Indiabulls Housing Finance Limited (IBHFL), was started in 2005 and is registered with National Housing Bank. In 2013, the parent company Indiabulls Financial Services Limited merged with Indiabulls Housing Finance Limited. The company provides mortgage loans, LRD, and construction finance with a prime focus on the mortgage and home finance business.

author dp
Team INRBonds
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Indian Bulls Housing Finance Bonds are trading at high yields in the market despite its AA rating by rating agencies. In this context, the market is viewing the issuer as high risk.

The current traded levels of IBHF bonds are given in table below.

Date

ISIN

Coupon (%)

Yield (%)

Maturity

06-Sep-21

INE148I08215

9.3000

11.5

29-Jun-26

02-Sep-21

INE148I08215

9.3000

9.37

29-Jun-26

02-Sep-21

INE148I08207

10.0000

12.6

03-Aug-25

01-Sep-21

INE148I07241

10.0000

9.14

19-Mar-23

01-Sep-21

INE148I08215

9.3000

9.51

29-Jun-26

31-Aug-21

INE148I08215

9.3000

9.37

29-Jun-26

30-Aug-21

INE148I08215

9.3000

9.37

29-Jun-26


Company Profile

Indiabulls Housing Finance Limited (IBHFL), was started in 2005 and is registered with National Housing Bank. In 2013, the parent company Indiabulls Financial Services Limited merged with Indiabulls Housing Finance Limited. The company provides mortgage loans, LRD, and construction finance with a prime focus on the mortgage and home finance business.

Credit Rating- In Feb 2020, Indiabulls Housing Finance Ltd has been downgraded to AA from AA+ by both ICRA and CRISIL. The downgrade has been caused by continued challenges faced by IBHFL in mobilizing long-term resources and the weakening of its market position as a leading financier to the housing sector.

Parameter (in billion)

FY19

FY20

FY21

Q1FY22

Interest income

165.69

128.64

98.33

22.97

Profit after tax

40.85

22.00

12.02

2.82

Assets under management

1205.25

930.21

807.41

792.13

Total assets

1310.68

1028.72

932.38

871.70

% CRAR

20.83

22.23

24.8

 

% Gross NPA

0.88

1.84

2.66

2.86

% Net NPA

0.69

1.24

1.59

1.55

Indiabull Housing Finance public debt issue

Issue Open

Sep 6, 2021 - Sep 20, 2021

Security Type

Secured NCDs and/or Unsecured NCDs

Issue Size (Base)

Rs 2 billion

Issue Size (Shelf)

Rs 8 billion

Issue Price

Rs 1000 per NCD

Face Value

Rs 1000 each NCD

Minimum Lot size

10 NCD

Market Lot

1 NCD

Listing At

BSE, NSE

Credit Rating

CRISIL AA/Stable and BWR AA+ /Negative

Tenor

24, 36, 60 and 87 Months

 


Series

Series 1

Series 2

Series 3

Series 4

Series 5

Series 6

Series 7

Series 8

Series 9

Series 10

Tenor

24 Months

24 Months

24 Months

36 Months

36 Months

36 Months

60 Months

60 Months

87 Months

87 Months

Type of Instrument

Secured NCDs

Unsecured NCDs

Frequency of Interest Payment

Annual

Cumulative

Monthly

Annual

Cumulative

Monthly

Annual

Monthly

Annual

Monthly

Coupon Rate (Retail)

8.75%

NA

8.42%

9.00%

NA

8.66%

9.25%

8.89%

9.75%

9.35%

Effective Yield (%)

8.75%

8.75%

8.75%

9.00%

9.00%

9.00%

9.25%

9.25%

9.75%

9.75%

Amount on Maturity

Rs 1,000.00

Rs 1,182.70

Rs 1,000.00

Rs 1,000.00

Rs 1,295.35

Rs 1,000.00

Rs 1,000.00

Rs 1,000.00

Rs 1,000.00

Rs 1,000.00

Weak Profitability- During FY21, IBHFL’s interest income came down by 23.56% on yearly basis to Rs 98.33 billion from Rs 128.64 billion in FY20. In the same line, net profit came down by 45% during FY21 on yearly basis. Its asset under management (AUM) also declined by 13% during FY21 on yearly basis.

Weakening Asset Quality-As of 31st March 2021, IBHFL’s gross NPA deteriorated to 2.66% from 1.84% as of 31st March 2021. Consequently, net NPA stood at 1.59% as of 31st March 2021. GNPA and NNPA further deteriorated to 2.86% and 1.55% as of 30th June 2021.

Challenges in resource mobilization from different sources – The operating environment has been challenging over the past five quarters with the prolonged liquidity squeeze and the risk averseness of investors towards wholesale-oriented NBFCs and HFCs, resulting in challenges in fundraising. The ongoing legal proceedings have heightened the risk-averse sentiments of lenders/investors, thereby impacting IBHFL’s financial flexibility. This will affect its profitability and growth prospects of the company going ahead.