Invest or Avoid: Indiabulls Housing 10.15% NCD launches today. Find out more.

Date : 06/03/2023
Read: 3 mins

Indiabulls Housing Finance is offering its NCD offering 10.15% per annum. Find out whether it is a good investment or not.

Indiabulls Housing Finance, a leading NBFC (Non-Banking Financial Company), launched the latest tranche of its Non-Convertible Debentures (NCDs) on 3^rd March 2023. Aggregating Rs.900 crores, the NCD would allow the NBFC to raise funds for its business needs. Let’s understand the details of the NCD and whether it is a good investment or not.

About Indiabulls Housing NCD

Here are some of the details of the NCD –

The base issue size is valued at Rs.100 crores, while the NBFC has received approval for retaining oversubscription up to Rs.800 crores.
The overall funds that Indiabulls Housing sought to raise through the NCD issue were Rs.1400 crores. This is the fifth installment to raise the desired funds.
75% of the proceeds raised from the NCD would be used for refinancing existing debts and increasing its lending portfolio. The remaining 25% would be used for corporate general purposes.
Different types of NCDs are issued in this tranche. Each NCD has a different tenure and a different interest rate. Have a look at the interest rates for retail investors and HNIs (High Net Worth Investors) –

The NCD is rated AA and has a stable outlook per ICRA and CRISIL ratings.
It is a secured debenture with a minimum investment of Rs.10,000, and each debenture has a face value of Rs.1000.

Should you invest in the NCD?

Indiabulls Housing is a stable NBFC that reported a 21% jump in its net profit after the third quarter of the financial year 2022-23. The NCD also offers a high interest rate of 10.15%, which is a favorable rate for a debt instrument. CRISIL’s rating indicates the NBFC’s capacity to service its debt and pay it off without hassle.

That being said, the NCD is rated AA which is lower than the AAA rating that shows the highest standard of safety. Moreover, Indiabulls Housing’s other long-term debt instruments were downgraded earlier this year which is also a cause for concern.

So, from the investment point of view, you should be careful. While the interest is attractive and the company has a stable financial position, the low credit rating can be a red flag. You can invest a part of your portfolio in this NCD and add a debt component which is also rewarding.

The tenure is short, so you don’t have to fear the low credit rating, and the interest makes up for the risk that you take.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.