Navi Finserv NCD July 23 review (May apply)

• This is the 2nd debt issue from NFL since May 2022.
• NFL is a digital technology-driven financial service company.
• It marked a setback for FY22 in its bottom line following the Pandemic.
• The issue is rated A/Stable by India Ratings and CRISIL Ratings.
• Investors looking for steady income may park funds for the medium to long term.

ABOUT COMPANY:
Navi Finserv Ltd. 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.

The company was originally incorporated as Chaitanya Rural Intermediation Development Services Private Limited. The name of our Company was changed to 'Navi Finserv Private Limited' in April 2020 and further to 'Navi Finserv Limited' in April 2022. It was permitted by RBI to commence/ carry on the business of a non-banking financial institution without accepting public deposits under Section 45IA of the RBI Act, 1934.

Since its launch and up to March 31, 2023, NFL has disbursed 2,660,511 personal loans amounting to Rs. 15396 cr. During the financial year ended March 31, 2023, it disbursed 1,870,683 personal loans amounting to Rs. 11500.41 cr., with an average ticket size of Rs. 61477. Currently, it provides home loans to customers across 10 cities and plans to expand its presence through digital as well as builder tie-ups.

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, according to the RedSeer Report.

As of March 31, 2023, NFL had 713 branches and 6,498 employees (of which, 3925 are relationship officers) spread across 183 districts in 12 states in India for its microfinance loans business.

ISSUE DETAILS:
The company is coming out with its 2nd secured redeemable NCD of Rs. 1000 each to mobilize Rs. 250 cr. and it has a green shoe option to retain oversubscription to the tune of Rs. 250 cr., thus making an overall issue size of Rs. 500 cr. The issue opens for subscription on July 10, 2023, and will close on or before July 21, 2023. 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. 10.00 cr. for this debt issue. From the net proceeds, it will utilize at least 75% for onward lending, financing or repayment with interest on 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 9.75% to 11.02% 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, 20% for Non-Institutions, 30% for HNIs and 30% for Retail investors.

ISSUE RATING:
This debt offering is rated IND A/Stable by India Ratings & Research Pvt. Ltd., and CRISIL A/Stable by CRISIL Ratings Ltd. Instruments with this rating are considered to have an 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.

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 in FY22 following the Pandemic impact.

Its net NPAs which were 0.99% in June 2021 declined to 0.33% in March 2023. As of March 31, 2023, its paid-up equity capital of Rs. 285.24 cr. is supported by free reserves of Rs. 2154 cr.

Conclusion / Investment Strategy

NFL is a digital technology-driven financial service company. It is posting growth despite the Pandemic's impact. Its debt instrument is rated A/Stable by India Ratings and CRISIL Ratings. Investors looking for steady income may park funds for the medium to long term.

Review By Dilip Davda on July 8, 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 Navi Finserv NCD July 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 Navi Finserv NCD July 2023 worth investing. The Navi Finserv NCD July 2023 Note sets the NCD expectations in systematic way which tells you if Navi Finserv NCD July 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Navi Finserv NCD July 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Navi Finserv NCD July 23 review (May apply)

Conclusion / Investment Strategy

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