Indiabulls Commercial Credit NCD

Indiabulls Commercial Credit Limited (ICCL) has launched its public issue of secured redeemable non-convertible debentures (NCDs).  Indiabulls Commercial Credit NCD issue plans to raise Rs. 2,000 crore from this public issue of secured redeemable non-convertible debentures (NCDs), including a green-shoe option of Rs. 1,000 crore. Indiabulls Commercial Credit Ltd. (ICCL), is a wholly owned subsidiary of Indiabulls Housing Finance Ltd. (IHFL) and is classified as a Non-Deposit taking Systematically Important (ND-SI) Non-Banking Financial Company (NBFC).

Indiabulls Commercial Credit NCD issue is rated ‘AAA’ by both rating agencies CRISIL and CARE and will carry an effective annual interest rate of 8.80% for 2 years tenor, 8.90% for 3 years,  9% for 5 years and 9.20% for 10 years.

Issue Summary/Highlights:
  • Issue shall open from Mon, 11 /09/2018 to Fri, 28/09/2018
  • The Indiabulls Commercial Credit NCD issue consists of Secured Redeemable Non-Convertible Debentures
  • For Retail investors the annual interest rate varies from 8.8% (annualized) to 9.2% deepening on the tenor i.e.  from 2-10 years. 
  • Indiabulls Commercial Credit NCD Base Issue size is Rs.1,000 Crore with an option to retain oversubscription up to Rs.1000 Crore aggregating up to Rs.2000 crores.
  • Minimum Rs.10,000/- ( 10 NCDs) collectively across one or  all the Options and in multiple of Rs.1,000 (1 NCD) thereafter. 
  • Allotment is only in Demat mode and is on first come first basis.
  • The NCDs have been rated “CRISIL AAA / Stable” by CRISIL as well as by  CARE Ratings Limited. which indicate highest degree of safety regarding timely servicing of financial obligations.
Subscription & Updates: Indiabulls Commercial Credit NCD
Indiabulls Commercial Credit(ICCL) has intimated the closure of Public issue of NCD on on Friday, September 14, 2018 (‘Early Issue Closure Date’) owing to its getting oversubscribed”
14/09/18
CategoryBase Size (Rs. Cr)With Green Shoe (Rs. Cr)x on base Sizex on Total Size
QIB1002002010.00
NII1002000.020.01
HNI4008002.041.02
Retail4008000.80.40
Total100020003.131.57
About Indiabulls Commercial Credit :
  • Indiabulls Commercial Credit Ltd. (ICCL), incorporated in 2006, is a wholly owned subsidiary of Indiabulls Housing Finance Ltd. (IHFL) and is classified as a Non-Deposit taking Systematically Important (ND-SI) Non-Banking Financial Company (NBFC).
  • ICCL has strong parental support of Indiabulls Housing Finance Ltd. 
  • Indiabulls Commercial Credit Limited (ICCL)  is primarily focused on the loan against property (LAP) segment. The company also operates in the builder finance segment to a limited extent. 
  • During FY2017, ICCL reported PAT of Rs. 58.55 crore on a total income of Rs. 380.88 crore. For 9M FY2018, the company reported PAT of Rs. 178.94 crore on a total income of Rs. 578.48 crore.
  • The company’s AUM was  Rs. 7,056.68 crore as on December 31, 2017.
Indiabulls Commercial Credit NCD issue Structure

Indiabulls Commercial Credit NCD issue is structured into following categories of Investors: 
Category I – QIBs– 10% of issue; Rs. 100  (200) crore
Category II – Non-Institutional Investors – 10% of issue; Rs.  Rs. 100  (200) crore
Category III – HNIs i.e. above Rs. 10 lakhs – 40% of issue; Rs. 400  (800) crore
Category IV –Individuals including HUFs – 40% of issue; Rs. 400  (800) crore

Investment Options:

SeriesIIIIIIIVVVIVII
TypeCumuCumuAnnualMonthlyAnnualMonthlyAnnual
Tenor2 years3 years3 years5 years5 years10 years10 years
Coupon  Catg. I & IINANA8.80%8.57%8.90%8.75%9.10%
Coupon Catg III & IVNANA8.90%8.66%9.00%8.84%9.20%
Eff Ann Yield8.80%8.90%8.89%9.00%9.00%9.20%9.19%
Matuarity Amount Rs.)1181.31288.211,0001,0001,0001,0001,000
Assessment:

  • NCDs are taxable, thus the return get reduced by individual’s Tax bracket. 
  • TDS is not deducted if NCDs are held in Demat form.
  • ICCL has strong parental support of Indiabulls Housing Finance Ltd.
  • I do not intend to apply in Indiabulls Commercial Credit NCD issue. I may purchase these debentures (2/3 year options) on listing from secondary market if listed at a discount. However deals in secondary markets are less with other complications and rates are not very different..
  • For those who are interested to apply, my preference is for 2 or 3 years option only as interest rates could harden over the long run.
  • These NCDs will be listed on stock exchanges. However in general  the spread  in NCDs is more as the Debt market is yet not fully developed in the country. Liquidity in group company India Bull housing debentures is not very high.
  • Since allotment is on first come first serve basis,  So those who desire to apply should do so on first day itself.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.