Indostar Capital NCD Sept. 24 issue review (May apply)

• This is the maiden debt offer from the company.
• After posting mega losses for FY22, it turned the corner.
• It marked lower net profits for FY24 on increased volume of business.
• This debt issue is rated CARE AA-/Stable.
• The company offers lucrative coupon rates.
• Well-informed investors may park moderate funds for medium term.

ABOUT COMPANY:
Indostar Capital Finance Ltd. (ICFL) is a non-banking finance company ("NBFC") registered with the Reserve Bank of India as a NBFC-ML. It is a professionally managed and institutionally owned company which is primarily engaged in providing secured financing solutions to borrowers across categories: used and new vehicle financing for transporters, affordable home finance solutions to home loan borrowers, loans to SME borrowers and structured term financing solutions to corporates.

The Company started its operations in 2011 as an NBFC focused on corporate financing. However, since its incorporation, it has refocused strategy to become a retail focused NBFC, with 95.86% of its AUM as of June 30, 2024 being in form of retail financing. The Company currently has two wholly owned subsidiaries: Indostar Home Finance Private Limited ("IHFPL") which provides affordable housing finance loans to salaried individuals, self-employed professionals, individuals belonging to the middle and low-income groups who reside in the outskirts of tier-II and below cities and Indostar Asset Advisory Private Limited ("IAAPL") which acts as an investment manager, registered with SEBI.

It operates four lines of business, namely commercial vehicle financing, housing finance, SME lending and corporate lending with a focus on commercial vehicle financing and housing finance businesses. In addition, it has also operated in SME finance and corporate lending and have been actively reducing exposure to these segments over the past two years.

ICFL secures financing from a variety of sources including term loans and working capital facilities, proceeds from the issuance of NCDs, from banks, mutual funds, insurance companies and other domestic, development financial institutions to meet its capital requirements, on a standalone basis. The diversification of the sources of funds has allowed it to strengthen liquidity position.

It has followed a strategy of continuous branch expansion across regions. As of June 30, 2024, it had presence in 541 branches in the 23 states in India through 4,578 employees (3,549 employees of its Company and 1,029 employees of subsidiary IHFPL), serving an active customer base of 2,59,103. Its branches are widely dispersed with no state accounting for more than 20.00% in terms of Gross AUM as of June 30, 2024.

ISSUE DETAILS:
The company is coming out with a maiden debt issue of 3000000 secured, redeemable, non-i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE.

The company is spending Rs. 7.99 cr. for this debt issue and from the net proceeds, it will utilize at least 990% towards onward lending and maximum 10% for general corporate purposes.

This debt issue is solely lead managed by Nuvama Wealth Management Ltd., Link Intime India Pvt. Ltd. is the registrar to the issue, IDBI Trusteeship Services Ltd. is the Debenture Trustee.

The company has allocated 10% for Institutional portion, 30% each for Non-Institutional portion, HNI Portion and Retail portion respectively.

This debt offer has tenure of 24 months, 36 months and 60 months and offers a coupon rates ranging from 10.30% to 10.70% based on the series opted by investors. The interest payment frequency shall be annually, quarterly or cumulative.

ISSUE RATING:
This debt offer is rated CARE AA-/Stable (CARE double A minus - stable) by CARE Ratings Ltd. Securities with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such securities carry very low credit risk. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision.

The rating given by CARE Ratings Limited is valid as on the date of this Prospectus and shall remain valid on date of issue and allotment of NCDs and the listing of the NCDs on Stock Exchanges unless withdrawn. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The rating agency has a right to suspend or withdraw the rating at any time on the basis of factors such as new information.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ - (loss) of Rs. 1174.29 cr. / Rs. - (736.51) cr. (FY22), Rs. 1179.65 cr. / Rs. 225.15 cr. (FY23), and Rs. 1397.54 cr. / Rs. 115.83 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 24.93 cr. on a total income of Rs. 394.34 cr.

Conclusion / Investment Strategy

The company is engaged in the financial services as and NBFC. It marked mega loss for FY22, and posted inconsistency in its net earnings for FY23 and FY24. The debt offer is rated CARE AA-/Stable and offers lucrative coupon rates. Well-informed investors may park moderate funds for medium term.

Review By Dilip Davda on September 9, 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 Indostar Capital Finance NCD September 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 Indostar Capital Finance NCD September 2024 worth investing. The Indostar Capital Finance NCD September 2024 Note sets the NCD expectations in systematic way which tells you if Indostar Capital Finance NCD September 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Indostar Capital Finance NCD September 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Indostar Capital NCD Sept. 24 issue review (May apply)

Conclusion / Investment Strategy

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