IIFL NCD

IIFL Finance Limited, an IIFL Group non-banking finance arm, has announced IIFL NCD (Non-Convertible Debenture) in 2021. Before we jump into the juicy details of this announcement, we must know a little about IIFL Finance and what NCD is.

IIFL Finance Limited is a systematically important NBFC (Non-Banking Financial Company) that does not accept public deposits and is engaged in Home and Property Loans, loans against securities, Gold Loans, and SME business and micro-finance loans.

It is an organization with a long-term credit rating of AA+/ Negative by Brickwork and AA/ Negative by Crisil.

Coming to the next aspect – NCD. NCD stands for Non-Convertible Debentures. It is a financial instrument used to raise resources or funds through a public issue or private placement for a corporate or the government.

The tenure of an NCD is pre-defined, and you can’t convert it into Equity. It is a fixed income debt instrument similar to a bank fixed deposit (FD) with an additional feature, i.e., they can be traded on the stock exchanges.

Lastly, if you invest in one, you can earn monthly, quarterly, annually, or cumulatively. The debenture holder is paid the principal amount at the maturity of the said instrument.

Let us have a quick look at the IIFL NCD Review:

IIFL NCD Review 

A trader or investor invests in an NCD to earn higher profits than a fixed deposit or other secured ways of investment. The interest rate in NCDs is, at times, double as that of different investment option in India.

Generally, NCD investors invest in them with the objective to trade them at the stock exchanges and earn profits from that. 

We have tabulated the essential information about IIFL Finance NCD in the table below:

 

Below are some of the points about IIFL NCD that are a must know:

1. You can earn up to 10.03% per annum.
2. The NCD issue opens on 3rd March 2021 and closes on 23rd March 2021.
3. The ratings by CRISIL and Brickwork indicate a higher degree of safety in servicing the financial obligations on time.
4. The duration of IIFL Finance NCD is 87 months (7 years and 3 months).
5. The subscriber is provided with the option of Monthly interest.
6. IIFL Finance has a perfect and robust track record of paying interest and principal repayment. Moreover, all of their previous issues were oversubscribed.
7. IIFL Finance is among India’s leading NBFC with a diversified and small-ticket retail loan book with AuM of ₹42,264 Cr.
8. The face value of every NCD is ₹1,000.
9. The NCD will be listed on NSE and BSE.

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IIFL NCD Issue

In this section, we will discuss the various aspects of the IIFL NCD Issue of 2021. The issue opening date is 3rd March 2021, and the official closing date is 23rd March 2021.

Although, the closing date is flexible depending on the applications for the IIFL Finance NCD.

Thus, the NCD might close before the closing date in case of oversubscription. Further, the nature of the issued NCDs is Subordinated Redeemable Bonds.

Some necessary information about the NCD includes:

• The Issuer for this NCD is IIFL Finance Limited.
• The registrar for this non-convertible debenture is Link Intime India Private Limited.
• The Lead Managers for this issue are – Edelweiss Financial Services Limited, IIFL Securities Limited, and Equirus Capital Private Limited.
• The Debenture Trustee to the Issue is Catalyst Trusteeship Limited.

The IIFL Finance NCD will be listed on both the major stock exchanges of India – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Issue size for this non-convertible debenture is ₹10,000 Million or ₹1,000 Crores.

The Issue price for every NCD is ₹1,000, and the face value is also ₹1,000 per NCD.

Since you are looking forward to investing in the IIFL Finance NCD, the minimum application amount is ₹10,000/- only.

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IIFL NCD Interest Rate

The interest rates on these NCDs are what makes them attractive for an investor or trader. So, here are the terms to the issue of IIFL NCD.

 

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IIFL NCD Form Download

To apply for the IIFL NCD, you have to follow the steps mentioned below:

• Visit the IIFL Finance website.
• The first card on the website reads – IIFL Bonds 2021.
• Click on the Apply Now button.
• You will get redirected to the corresponding page.
• Here, you can click on the Subscribe Now button.
• You are required to enter your name and mobile to register.
• You will be guided throughout the further process.

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IIFL NCD Allotment Status

After you have applied for the IIFL NCD, you must be excited to keep track of the allotment status. But are you confused about how to do so?

Don’t worry. We got your back!

Once the IIFL Finance NCD is closed, you have to follow the steps below:

1. Visit the IIFL Finance NCD Allotment page. 
2. Click on the tab that reads – IIFL NCD Allotment Status.
3. Enter the required details like – PAN Card Number, Application Number, Client ID of the Demat Account.
4. Enter the CAPTCHA.
5. Click on the Search Bar.
6. Your allotment status will be displayed on the screen.

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In case you don’t have a demat account, open it for free by referring to the form below

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However, if the allotment status button is disabled, it means that the allotment status is currently unavailable or not online.

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IIFL NCD Reason

As an investor or trader, you must be wondering why you should subscribe to the IIFL NCD. Right?

Well, here are some reasons that will help you make the decision. They are:

Good Interest Rates

The IIFL Finance NCD offers a great interest rate in comparison to the fixed income instruments. The effective yield in this debt instrument is up to 10.03% per annum, depending on the interest payment frequency you choose.

Further, the coupon rate per annum is up to 10.00%, and it varies according to the interest payment frequency.

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High Liquidity 

Since the NCD is permitted to be traded on the stock exchange, you can trade them at any point in time and exit the deal. This facility allows the traders or investors to invest with decreased stress of their capital being trapped for a specific time.

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Easy to Apply

The IIFL NCD is a debt instrument that is issued on a first come first serve basis. If the subscriptions surpass the requirements of the company, the NCD might be closed before the mentioned date, as mentioned in its DRHP.

The method to apply for this NCD is easy. You must have an active demat account with any stockbroker. One of the best options is to apply using your IIFL demat account. 

If you open a demat account with IIFL Securities, the account can be opened for free and the services extended by the broker are undoubtedly worth bragging about.

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Ratings

As discussed above, the NBFC is rated well by some of the best rating agencies CRISIL (AA/ Negative) and Brickwork (AA+/ Negative). These ratings speak volumes about the freshly introduced IIFL Finance NCD.

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IIFL NCD Returns

Whenever an investor or trader looks to invest in an NCD, they look for the returns they will receive at maturity. So, let us understand the IIFL NCD returns with the help of an example.

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Rahul is interested in investing in the debt instrument launched by IIFL Finance. But, before he makes a decision, he has to analyze the prospects of the investment.

He can choose one out of the ways – 

1. Valuation
2. Yield To Maturity (YTM)

If he chooses the Valuation way, he is aiming to adjust his investment to inflation and does not worry about a minimum return percentage. Here, the calculation will be as follows:

Suppose he applies for ₹10,000 and chooses the frequency of interest payment as monthly.

Thus, the interest amount he receives annually is –

₹10,000 X 10.00% = ₹1,000

Now, he will receive this interest amount in 12 installments as he chose the monthly payment option. 

At the end of 87 months, he receives – ₹7,250 as interest amount, and at maturity, he gets his principal back, i.e., ₹10,000. This makes his total earning to be ₹17,250.

He discounts this amount for the inflation rate and decides if it is worth the investment.

On the other hand, if he chooses the second option of Yield to Maturity (YTM), he looks for a minimum investment return percentage. Suppose this percentage for Rahul is 10%.

If the final return is not equal to or more than this percentage, he would not be willing to invest in such a bond.

Another aspect that is considered in this option is when he can reach the break-even point. The breakeven point is calculated by using its formula.

After he calculates the breakeven point, he will decide on investing in the IIFL Finance NCD. 

This situation was all about when Rahul chooses to go for Coupons. But, the flip side is if he decides to generate an effective yield.

In this case, the interest amount is reinvested in the IIFL NCD, and the principal for calculating interest in the following year is compounded.

So, if he chooses this, he will undoubtedly make a minimum of 10.00% compounded yield on his investment.

So, for the above example, he will receive approximately ₹24,000 that is an increase of 140% roughly.

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IIFL NCD Risk

The risk involved in any investment is never zero. However, the risk of losses can be minimized by making calculated decisions and planning your entry and exit in the trade.

Since the NBFC is known for its proven track record of repayment, you can invest in the IIFL NCD with a little less worry.

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Conclusion

IIFL NCD is a Non-Convertible Debenture announced by IIFL Finance Limited that is an NBFC. It was opened for subscription on 3rd March 2021 and is expected to close on 23rd March 2021.

Although, if the NCD is oversubscribed before this date, it might be closed earlier than expected.

All the important information about the IIFL Finance NCD has been shared in its entirety. The investment advisors suggest that the company is backed by a strong set of foreign investors.

Moreover, the double-digit coupon rate is higher than normal and has a scope for capital appreciation to investors as the NNBFC space is coming back to normalcy.

We hope that all your queries in this regard are resolved.

Happy investing!

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