Indiabulls Housing Finance September 2023 Public NCD Review

5 min read • Published 6 September 2023
Written by Darshan Maheshwari

About the Issue

Indiabulls Housing Finance Limited has launched its public issue of NCDs to mobilise funds from the debt market. Read further to know more about the business of Indiabulls Housing Finance Limited.

IssuerIndiabulls Housing Finance Limited
Type of InstrumentListed, Secured, Redeemable, Non-Convertible Debentures
Issue Size (Shelf prospectus)₹ 2,000 crores across various tranches
Issue Size (Tranche II)Rs. 100 crs + Rs. 100 crs (Green shoe option)
Face ValueRs. 1,000
Tenure24 months to 120 months across Series I-XII
Yield9.24% to 10.74% across Series I-XII (this depends on the category of investor)
Application sizeMinimum 10 NCDs and in multiples of 1 NCD thereafter
Security CoverMinimum 125% security cover of the principal outstanding plus interest thereon
Credit RatingCRISIL AA/Stable and ICRA AA/Stable
Issue Open Date06-September-23
Issue Close Date20-September-23

Specified terms of the NCD’s are as follows*:A white sheet of paper with black text

*There is no call or put options on any of the series

About Indiabulls Housing Finance Limited

Incorporated in 2005, Indiabulls Housing Finance Limited (“IBHFL”) is a housing finance company registered with National Housing Bank (NHB). IHFL is the flagship company of Indiabulls Group. The company is primarily engaged in the business of home loans and loans against property. They also offer plot loans and loans against residential, commercial, and rental property. The business model of the company is providing finance to persons, body of individuals, companies, institutions, firms, builders, contractors, etc for construction, erection, building repair, remodeling development, improvement purchase etc; to build to take on lease purchase or acquire in any manner whatsoever any apartments, houses, flats, bungalows, township rooms etc; to carry on the business of financial advisors and consultants on its own or jointly with others.

About the Indiabulls Group

Over the years, IBHFL has established its presence in the housing finance market as one of the top institutions in history. The total income of the company amounted to ₹ 8,725.79 crs for the year ended March 31, 2023, and ₹ 8,993.90 crs for the year ended March 31, 2022, on a consolidated basis. The company earned profit of ₹ 1,129.69 crs for the year ended March 31, 2023, and ₹ 1,177.74 crs for the year ended March 31, 2022, on a consolidated basis.

The Indiabulls group consists of 15 entities including the parent IBHFL which has been listed below:

6QkMlW s0ay31 T ItIXGOH58Mdz38f7DwDsLV6yeaXfSbsKAyy4K5Sqhi 49EFRwn3DM0rolos FRqEXBiKjdBcJ21my V4HKdCgX1pRrlvf5uemX Ymy9r fIGQ8BFPyy8SAGiPufEzd QPIASKxx3uCC9 FJ

History of Indiabulls Housing Finance Ltd

IBHFL is one of the top 5 largest housing finance companies which was incorporated on May 10, 2005, with headquarters in New Delhi. IBHFL started operating as a subsidiary of IBFSL.

In 2015, the company has acquired about 40% stake in UK-based Oak North Bank for USD 100 million (about ₹ 660 crore). On November 14, 2017, IBHFL announced that it has sold one-third of its stake in Oak North Bank to Government of Singapore owned investment arm, GIC, for ₹ 770 crore. During FY 2020-21, the Company sold up to 91% of its stake held in Oak North for an undisclosed sum; and the remaining in FY 21-22 for a consideration of ₹ 294 crore.

The Board of Directors of Indiabulls Housing Finance Limited (100% subsidiary of IBFSL) and Indiabulls Financial Services Limited (IBFSL Erstwhile Holding Company) at their meeting held on April 27, 2012, had approved the Scheme of Arrangement involving reverse merger of IBFSL with the Company with the Appointed Date of the proposed merger fixed on April 1, 2012. The Hon’ble High Court of Delhi vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme of Arrangement and consequently IBFSL as a going concern stands amalgamated with IBHFL with effect from the Appointed Date being April 1, 2012.

IBHFL is a listed company on the Indian Stock Exchange. The company has zero promoter holding as of June 2023. However, big institutional investors like LIC, Kotak MF and foreign institutional investors hold 8.45%, 1.52%, 18.53% respectively as of June 2023.

Over the years, IBHFL has established its presence in the housing finance industry and has emerged as one of the leading housing finance lenders in terms of portfolio size and market share. IBHFL has served more than 1.4+ million clients with 5,300+ employees operating through 210+ branches in India. The company had collectively disbursed loans over ₹ 3 lakh Crores.

In 2014, the Company was awarded as the Fastest Growing Housing Finance Company of the Year 2013-14 by NAREDCO (National Real Estate Development Council). The company was awarded `Best Housing Finance Company’ by Realty Plus and `Best Affordable Housing Finance Company of the Year’ by ASSOCHAM. The company expanded its overseas presence with the launch of its first representative office in Dubai.

Financial Performance (at consolidated level)

(Rs crs)

ParticularsFY23FY22FY21
Net Worth*17,30316,61616,076
AUM55,831.3059,950.1965,407.25
Borrowings52,09861,16168,666
PAT1,1301,1781,201
PAT margin**12.92%13.11%12.10%
GNPA3.37%3.76%3.16%
NNPA2.24%2.21%1.90%
Debt to Equity3.013.684.27

* Net worth = Equity share capital + Other equity – Goodwill on consolidation **PAT margin = PAT / Revenue from operation. 

CRAR of IBHFL (Standalone)

Name of the NBFCMinimum Regulatory CRARCRAR as of March 31, 2021CRAR as of March 31, 2022CRAR as of March 31, 2023
Indiabulls Housing Finance Limited15%22.84%22.49%23.01%

Borrowings (Standalone)

Top 10 NCD holders as on June 30, 2023:

Jw5lOl6PYDJbtLwJu0xAzGk5NnOPA3q0KMwHFAwDtUSRZK5UZqb2bFuo8oQlpFlghdrVgbpbiQK6cjTK6DxxOgiopvGfENa riqPIBhHrBaje8RfR3YGqDM

Nature of Borrowings

Nature of BorrowingsQ1 FY24FY23FY22FY21
Secured41,852.3643,109.0352,406.7658,587.35
Unsecured4,296.364,066.284,296.034,348.71
Total46,148.7247,175.31  56,702.79  62,936.06

Type of Borrowings

Type of borrowingQ1 FY24FY23FY22FY21
Bank Borrowings25,781.2425,275.1528,850.8329,422.65
Debt Securities16,443.4117,833.8823,555.9329,164.70
Subordinated Debt3,924.074,066.284,296.034,348.71
Other Borrowings
Total46,148.7247,175.31  56,702.79  62,936.06

Peer Comparison* (FY 2023)

ParticularsHDFCLIC Housing FinanceIBHFL
Revenue from operation1,52,940522,7148,719
PAT27,7002,8911,130
Net Worth2,15,31224,74317,303
AUM6,36,755275,00655,831
ROE13.58%11.13%6.66%
ROA2.69%1.08%1.44%
GNPA1.40%4.49%3.37%
NNPA0.74%2.70%2.24%
Debt to equity2.6910.053.01

*Consolidated                                                                                                                                                               

Rating AgencyHDFCLIC Housing FinanceIBHFL
CRISILAAA/StableAAA/StableAA/Stable
ICRAAAA/StableNot RatedAA/Stable
CARENot RatedAAA/StableNot Rated
India RatingsNot RatedNot RatedNot Rated

Credit Rating history

YearRating Agency202120222023
RatingCRISILAA/StableAA/StableAA/Stable
ICRAAA/NegativeAA/StableAA/Stable

Conclusion

Comforts:

  • Leading housing finance company with an established track record.
  • Strong capitalization with healthy cover for asset side risks.
  • Sizeable presence in the retail mortgage finance segment with healthy asset quality.

Concerns:

  • Weak asset quality indicators in commercial credit portfolio.
  • Moderate earnings profile.
  • Successful transition to new business model to be established.

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Darshan Maheshwari

Credit Associate
Darshan is an up-and-coming Investment analyst making headway in the field of capital markets. He has completed his Chartered Accountancy and CFA Level 1 exam. He is currently working as a Credit Associate at Wint Wealth.

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