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• This is the 3rd debt issue from NFL since May 2022.
• Last debt offer was in July 2023.
• NFL is a digital technology driven financial service company.
• It marked a setback for FY22 in its bottom line amidst the Pandemic.
• The issue is rated A/Stable by CRISIL Ratings.
• Well-informed Investors may park moderate funds.
ABOUT COMPANY:
Navi Finserv Ltd. (NFL) is a non-deposit taking, systemically important NBFC registered with RBI and a wholly owned subsidiary of Navi Technologies Ltd. (NTL). NTL is a technology-driven financial products and services company in India focusing on the digitally connected young middle-class population of India. The Company offers lending products like personal loans and home loans under the "Navi" brand. It also offers microfinance loans, under the "Chaitanya" brand through its Subsidiary, CIFCPL.
Since its launch and up to September 30, 2023, NFL has disbursed 3,671,272 personal loans amounting to Rs. 21532.13 cr. During the six months' period ended September 30, 2023, it disbursed 1,010,761 personal loans amounting to Rs. 6136.15 cr., with an average ticket size of Rs. 60708. From the date of the launch, it has approved personal loans to customers across over 99.69% of all Indian pin codes. As of September 30, 2023, the Company's personal loans business had an AUM of Rs. 6763.58 cr.
Company's home loans product was launched under the "Navi" brand in February 2021 to extend: (a) home loans for ready to move-in, under-construction and self-constructed properties, and (b) loans against property for constructed properties. As of March 31, 2023, it has disbursed home loans across 10 cities in India. It offers loans up to Rs. 10 cr. with a tenor of up to 40 years. As of September 30, 2023, the Company had an AUM of Rs. 725.76 cr. and since launch it has disbursed loans amounting to Rs. 1178.56 cr. with an average ticket size of Rs. 0.62 cr. during the six months' period ended September 30, 2023. As of the said date, it had CRAR of 25.56% in the Company which is higher than statutory minimum CRAR of 15.00% as prescribed by RBI.
It operates a mobile-first, app-only model for personal loans and home loans through the Navi App. This model enables it to (a) cater to digitally connected Indians, (b) avoid intermediation and reach customers directly in tier-1 cities and beyond, and (c) offer an unassisted buying journey with one of the lowest turnaround times amongst lenders in India, in the personal loans category. As of September 30, 2023, it had 955 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its 2nd secured redeemable NCD of Rs. 1000 each to mobilize Rs. 300 cr. and it has a green shoe option to retain oversubscription to the tune of Rs. 300 cr., thus making an overall issue size of Rs. 600 cr. The issue opens for subscription on February 26, 2024, and will close on or before March 07, 2024. 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. Post allotment, NCDs will be listed on BSE and NSE.
NFL is spending Rs. 10.05 cr. for this debt issue. From the net proceeds, it will utilize at least 75% for the onward lending, financing or repayment with interest of certain borrowings and up to 25% for general corporate purposes.
This issue is solely lead managed by JM Financial Ltd., while Catalyst Trusteeship Services Ltd. is the Debenture Trustee. Link Intime India Pvt. Ltd. is the registrar of the issue.
This debt offer has coupon rates ranging from 10.00% to 11.19% and tenors of 18 months, 27 months and 36 months. The frequency of interest payment will be Monthly/Annually as per the selection of the series applied.
The company has allocated 20% for Institutions, 25% for Non-Institutions, 25% for HNIs and 30% for Retail investors.
ISSUE RATING:
This debt offer is rated CRISIL A/Stable by CRISIL Ratings Ltd. Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. The rating provided by India Ratings and 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. For this debt issue, the company has kept only one rating agency against two kept for its last debt issue of July 2023.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, NFL has (on a consolidated basis) posted a total income/net profits - (loss) of Rs. 565.24 cr. / Rs. 118.17 cr. (FY21), Rs. 819.89 cr. / Rs. - (14.66) cr. (FY22), and Rs. 2078.55 cr. / Rs. 264.16 cr. (FY23). It suffered a minor setback for bottom line in FY22 following the Pandemic impact. For H1 of FY2 ended on September 30, 2023, it earned a net profit of Rs. 37.07 cr. on a total income of Rs. 862.35 cr. (on a standalone basis). Thus inconsistency in its top and bottom line is surfacing.
As of September 30, 2023, its paid-up equity capital of Rs. 285.24 cr. is supported by free reserves of Rs. 2020.93 cr.
Its net NPAs that were 0.99% in June 2021 has declined to 0.29% in September 2023. Its debt equity ratio as of September 30, 2023 of 2.75 will stand enhanced to 3.01 post this issue.
Review By Dilip Davda on February 21, 2024
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 Navi Finserv NCD February 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 Navi Finserv NCD February 2024 worth investing. The Navi Finserv NCD February 2024 Note sets the NCD expectations in systematic way which tells you if Navi Finserv NCD February 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Navi Finserv NCD February 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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