Indiabulls Housing Finance recently rolled out a public issue of bonds to raise up to ₹800 crore. These will be secured, redeemable, non-convertible debentures (NCD) with a face value of ₹1,000 each. This will be the tranche III for the non-banking finance company, which closes on October 28, 2022. The date of allotment is November 3.
The base issue size of bonds is of ₹100 crore with an option to retain over subscription up to ₹700 crore, the company said in a statement.
The NCDs are proposed to be listed on BSE and NSE.
Returns on bonds
The minimum application is of ₹10,000 and the allotment will be on first come-first serve basis.
These bonds carry coupon rates ranging from 8.33-9.55 per cent per annum, it said, adding that the tenure is of 24 months, 36 months and 60 months belonging to various series. Frequency of interest payment will be annual, cumulative and monthly based on tenor and series.
In order to earn a higher interest, investors might want to explore an investment in these bonds. Financial experts, however, believe that investors must exercise caution before going ahead with investing in these bonds.
“We do not recommend any investment in bonds of a single issuer for a conservative investor. If a person has enough corpus to diversify across multiple issuers and multiple maturity bonds and can build a bond portfolio, they can consider secured bonds of well established businesses. They need to understand the risks involved including default risk and interest rate risk. Conservative investors are better off with secured investment products where they get certainty of interest income and safety of capital albeit lower rates,” said Sridevi Ganesh, co-founder of Chamomile Investment Consultants.
Deepesh Raghaw, a SEBI-registered investment adviser and Founder of Personal Finance Plan, too, echoes the similar sentiments.
“The risk (of investing in an NBFC) is not worth it. Now FDs offer closer to 6 percent, and small saving instruments offer close to 7 percent. So, I — personally — would not recommend investing in a high-risk product for 1-1.5 percent higher interest,” he said.
“It is vital to understand that return of capital is more important than the return on capital. If investor does not acknowledge whether there is a risk of capital or not, they would end up doing incorrect allocation. That should be avoided,” he added.
Disclaimer: This article is for informational purposes only. Please speak to a SEBI-registered financial advisor before taking any investment-related decisions.