9.20% Indiabulls Commercial Credit Ltd. NCD – September 2018 – Should you Invest?

Indiabulls Commercial Credit has come out with latest NCD (non-convertible debentures) offering up to 9.20% interest rate. The issue opens on September 11 and closes on September 28, 2018.

Indiabulls Commercial Credit Ltd. (ICCL), incorporated in 2006, is a wholly owned subsidiary of Indiabulls Housing Finance Ltd. (IHFL) and is classified as a Non-Deposit taking Systematically Important (ND-SI) Non-Banking Financial Company (NBFC). ICCL with strong parental support has considerable expertise in mortgage based financing. SME loans, that ICCL and IHFL underwrite are in the lowest risk segment where loans are given out to small businesses.

Indiabulls Commercial Credit NCD - September 2018

Indiabulls Commercial Credit NCD – September 2018

Indiabulls Commercial Credit NCD – Significant Points:

  • Offer Period: September 11 to 28, 2018
  • Annual Interest Rates for Retail Investors: 8.70% to 9.20% depending on tenure
  • Price of each bond: Rs 1,000
  • Minimum Investment: 10 Bonds (Rs 10,000)
  • Max Investment Limit for Retail Investor: Rs 10 Lakhs
  • Credit Rating: “CRISIL AAA Stable” by CRISIL Limited and “CARE AAA Stable” by CARE Ratings Limited
  • NCD Size: Issue size is Rs 1,000 crore (with an option to retain over-subscription amount of up to Rs 1,000 crore more )
  • NRIs are NOT eligible to apply to this NCD issue.
  • Allotment: First Come First Serve
  • Listing: Bonds would be listed on BSE and NSE and will entail capital gains tax on exit through secondary market

Also ReadKnow NCD – Investment Tips, TDS and Taxation

Indiabulls Commercial Credit NCD – Investment Options:

There are 7 options of investment in Indiabulls Commercial Credit NCD.

Indiabulls Commercial Credit NCD - Investment Options - September 2018

Indiabulls Commercial Credit NCD – Investment Options – September 2018 (click to enlarge)

Company shall allocate and allot Series V NCDs wherein the Applicants have not indicated their choice of the relevant NCD Series.

The bonds can be purchased in Demat Form.

Indiabulls Commercial Credit NCD – Who can Apply?

This issue is open to all Indian residents, HUFs and Institutions.

  • Category I – QIB Portion – 10% of the issue is reserved
  • Category II – Corporate Portion – 10% of the issue is reserved
  • Category II – HNIs – 40% of the issue is reserved
  • Category III – Retail Individual Investors including HUFs – 40% of the issue is reserved

However NRIs cannot apply for this NCD.

Why you should invest?

  1. The credit rating is AAA which is good for investment purpose
  2. The NCD is secured, which means the above debt is backed by assets of the company
  3. The interest rates are 1%-2% higher than your regular Bank FDs
  4. No TDS if invested in Demat Form

Also Read: Highest Interest Rate on Recurring Deposits

Why you should not invest?

  1. The banks have started increasing interest rates on fixed deposits and hence it may not be good idea to invest for long term (DO not go for 10 year tenure – you might get better opportunities going forward).
  2. You can also invest in high rated company fixed deposits or Small Bank Fixed Deposits offering 9% 
  3. For people in highest tax bracket Tax free bonds are trading at yields of 6.1% to 6.3% – which would turn out to be better and more secure investment
  4. Tata Capital Financial Services Ltd NCD is also open for subscription with same rating and similar interest rate.
  5. Aadhar Housing Finance NCD is also open for subscription with AA+ rating but interest rate up to 9.75%.

How to Apply?

If you have Demat account apply through that or ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work

Learn: How to apply for NCD issues using ASBA?

In case you don’t want to do it online, you can download the application form from Financial Institutions and submit to collection centers.

Recommendation:

  1. My recommendation is to invest some part of your Fixed Income investment in this NCD Issue  (3 or 5 year tenure bonds only)
  2. You should always have diversified portfolio be it fixed deposit, NCD or equity investment
  3. Its good idea to remain invested till maturity because liquidity on exchanges is low and hence you would get lower than market value

If you plan to invest in this issue, do it on first day as most NCD issues are over-subscribed within few days of opening.

Leave a Reply

Your email address will not be published. Required fields are marked *