ICL Fincorp NCD Nov. 23 issue review (May apply)

• IFL is primarily is a gold loan company with major operations in southern states.
• It has posted an average financial performance so far.
• It is offering a lucrative coupon rates, but has a poor BBB-/Stable rating from ACUITE.
• Well-informed investors may park moderate funds for medium term.
• The company has allocated 75% of the issue for the retail investors.

ABOUT COMPANY:
ICL Fincorp Ltd. (IFL) is a non-deposit taking and a systemically important non-banking finance company ("NBFC") in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the states of Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, Odisha, Gujarat and Maharashtra. It also provides loans against property, business loans and personal loans. IFL's Gold Loan portfolio (excluding off-balance sheet assets) for the quarter-ended June 30, 2023 and Fiscals 2023, 2022, 2021 amounted to Rs. 409.95 cr., Rs. 392.94 cr., Rs. 335.63 cr. and Rs. 280.47 cr. respectively.

As of September 30, 2023, it had a network of 258 branches with major presence in the southern states including Kerala, Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and Odisha. It is currently registered with RBI as a non-deposit taking, NBFC (registration no. B-07.00437 dated June 9, 2016) under Section 45 IA of the Reserve Bank of India Act, 1934.

The Company specializes in providing Gold Loans to individuals, primarily from middle-class families. Its Gold Loan business is built on the foundation of customer-centricity, efficiency, and with commitment to deliver seamless financial services.

It offers special schemes with shorter tenures for customers who require quick financing with the intent to repay within a limited period. Customers with long term financial objectives can opt for schemes that provide extended repayment tenures. It has specific schemes that offer higher LTV ratios, allowing customers to avail higher loan amounts. It focuses on rapid, on the spot approval and disbursement of loans with minimal procedural formalities which its customers need to complete in order to avail a loan. It has developed various Gold Loan schemes to meet the different needs of various customers.

ISSUE DETAILS:
The company is coming out with its maiden debt offer. The company is offering Secured, Redeemable, Non-Convertible Debentures having a face value of Rs. 1000 each. The size of the issue is Rs. 100 cr. The issue opens for subscription on November 28, 2023, and will close on or before December 11, 2023. Post allotment, NCDs will be listed on BSE.

IFL is spending Rs. 2.13 cr. for this NCD issue and from the net proceeds, it will utilize at least 75% for onward lending, financing and for repayment of certain borrowings, and maximum up to 25% for general corporate purposes.

The issue is solely lead managed by Saffron Capital Advisors Pvt. Ltd., while Cameo Corporate Services. Ltd. is the registrar of the issue. Mitcon Credentia Trusteeship Services Ltd., is the Debenture Trustee for the issue.

The minimum application to be made is for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. The interest payment frequency will be Monthly, Cumulative, or Annual as per the selection of the series by the investors. It is offering a coupon rate ranging from 11.00% to 12.50%, and has a tenors of 13 months, 24 months, 36 months, 60 months, and 68 months. The company has allocated 1% for Institutional Investors, 4% for Non-Institutional Investors, 20% for HNIs and 75% for Retail investors.

CREDIT RATING:
The issue is rated as ACUITE BBB-/Stable by ACUITE Ratings and Research Ltd. The rating given by Acuité is valid as on the date of this Prospectus and shall remain valid on date of the issue and allotment of NCDs and the listing of the NCDs on BSE. The ratings provided by Acuité may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and Investors should take their own decisions.

FINANCIAL PERFORMANCE:
On the financial performance front, IFL has posted a total income/net profit of Rs. 76.35 cr. / Rs. 2.80 cr. (FY21), Rs. 89.43 cr. / Rs. 2.71 cr. (FY22), Rs. 112.64 cr. / Rs. 3.04 cr. (FY23). For Q1 of FY24 it earned a net profit of Rs. 0.86 cr. on a total income of Rs. 36.13 cr.

Its net NPA stood at 1.68% for Q1-FY24, against 3.53% for FY23. Its debt equity ratio of 4.30 as of June 30, 2023, will stand enhanced to 5.38 post this NCD issue.

Conclusion / Investment Strategy

The company is primarily a gold loan company having major operations in southern regions. It has posted an average financial performance so far. Poor rating of BBB-/Stable by ACUITE is a concern, though it is offering a tempting coupon rates. Well-informed investors may park moderate funds for the medium term.

Review By Dilip Davda on November 24, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

The ICL Fincorp NCD Nov 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if ICL Fincorp NCD Nov 2023 worth investing. The ICL Fincorp NCD Nov 2023 Note sets the NCD expectations in systematic way which tells you if ICL Fincorp NCD Nov 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in ICL Fincorp NCD Nov 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.

ICL Fincorp NCD Nov. 23 issue review (May apply)

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