Indel Money NCD Jan 24 Issue review (May apply)

• This is the 4th debt offer from the company since September 2021.
• The last debt offer was in the month of June 2023.
• It marked sudden growth in its top and bottom lines from FY23 onwards.
• Average rating of BBB+ raises concern.
• Well informed/Risk seekers/cash surplus investors may park their funds, others may ignore.

ABOUT COMPANY:
Indel Money Ltd. (IML), an NBFC-ML in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Odisha, Maharashtra and Telangana and the union territory of Puducherry. It also provides loans against property, business loans and personal loans.

As of September 30, 2023, it had a network of 250 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Odisha, Maharashtra and Telangana and the union territory of Puducherry, and had an employee strength of 1201.

It belongs to the Indel Group, which entered into the regulated financial services business at a small village in Palakkad, Kerala under a State Government Money lenders license. Over the years the Group has diversified its presence from being a financial services company to automobile dealership, hospitality, infrastructure development, media, communication and entertainment.

IML's Gold Loan customers are individuals primarily from rural and semi-urban areas. It focuses on rapid, on the spot approval and disbursement of loans with minimal procedural formalities which customers needs to complete in order to avail a loan from the company. IML has developed various Gold Loan schemes to meet the different needs of various customers. As of September 30, 2023, it held cash balance of Rs. 30.13 cr. and gold jewellery of 3.17 tons, respectively.

ISSUE DETAILS:
The company is coming out with its 4th debt offer of Secured redeemable non-convertible debentures (NCDs) having a face value of Rs. 1000 each. The company will have a base issue size of Rs. 100 cr. and with a green shoe option of Rs. 100 cr., the overall size of the offer will be Rs. 200 cr. The issue opens for subscription on January 30, 2024, and will close on or before February 12, 2024. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. The company will be spending Rs. 2.23 cr. for this entire debt offer of Rs. 200 cr.

The company has allocated 10% for Category I (Institutional), 40% for Category II (Non-Institutional), and 50% for Category III (Retail Investors).

From the net proceeds, the company will utilize at least 75% for onward lending, financing, repayment/prepayment of certain borrowings with interest and maximum up to 25% for general corporate purpose.

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd., Catalyst Trusteeship Ltd. is the debenture trustee and Link Intime India Pvt. Ltd. is the registrar to the issue.

This issue has tenures of 366 days, 24 months, 36 months, 60 months and 72 months for secured NCDs The company is offering interest rates ranging from 9.00% to 11.50%. The interest payments have monthly and cumulative modes as per the options selected by the investors.

ISSUE RATING:
This debt offer is rated CRISIL BBB+/Stable by CRISIL Ratings Ltd. The instruments with this rating are considered to have moderate degree of safety and moderate credit risk. The rating given by CRISIL 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 CRISIL 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, for the last three fiscals, IML has reported total income/net profit of Rs. 94.49 cr. / Rs. 9.49 cr. (FY21), Rs. 123.00 cr. / Rs. 2.11 cr. (FY22), and Rs. 187.30 cr. / Rs. 20.54 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 28.59 cr. on a total income of Rs. 143.40 cr. It marked boosted growth in its top and bottom lines from FY23 onwards.

Its current debt-equity ratio of 4.88 will enhanced to 5.94 post this debt issue. As of September 30, 2023, its Rs. 143.15 cr. equity capital is supported by free reserves worth Rs. 56.76 cr. As of the said date, its net NPA stood at 4.79%, up from 3.40% as of March 31, 2023. This is a major concern. Its total outstanding AUM as of September 30, 2023 stood at Rs. 817.41 cr.

Conclusion / Investment Strategy

Though this debt offer has lucrative coupon rates, average rating of BBB+ raise concerns. It marked sudden growth in its top and bottom lines from FY23 onwards. Rising NPAs are alarming. Well informed /Cash surplus/risk seekers investors may consider parking of funds, others may ignore it.

Review By Dilip Davda on January 25, 2024

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 Indel Money NCD January 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Indel Money NCD January 2024 worth investing. The Indel Money NCD January 2024 Note sets the NCD expectations in systematic way which tells you if Indel Money NCD January 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Indel Money NCD January 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Indel Money NCD Jan 24 Issue review (May apply)

Conclusion / Investment Strategy

Review Author

Read more about Indel Money NCD January 2024