Incred Financial Services Limited NCD
InCred is a non-deposit taking systemically important NBFC registered with the RBI. The Company caters to lower middle class to middle class Indian households for their personal finance needs like education loans, personal loans. Correspondingly, it also offers secured and unsecured business loans to small businesses, secured loan to K12 Indian schools for their expansion plans, supply chain financing, lending to profitable financial Institutions and microfinance companies and escrow backed lending through its SME vertical.
The Company, a non-deposit taking, systemically important NBFC engaged in providing structured funding, senior secured lending, promoter financing, acquisition financing and mezzanine financing, commenced operations in October 2009. Following the restructuring in March 2017, the Company is a 100% owned subsidiary of KKR Capital Markets India Private Limited (KCM India).
The Company’s business activities are exposed to various risks, namely credit risk, operational risk, regulatory risk, IT risk, liquidity risk, interest rate risk, market risks, reputational risk, event risk, compliance risk and strategic risks.
The products of InCred Financial Services Limited can be categorised as
(i) Consumer Loans
(ii) Education Loans
(iii) MSME Loans
The company further divides the products and services as – Personal Loans, Student Loans, Secured School Financing, Anchor & Escrow Backed Business Loans, Structured Lending, and Lending to FIs.
Objective of NCD Incred Financial Services Limited NCD:
The Company has filed this Draft Prospectus for a public issue of secured, redeemable, NCDs for an amount up to ₹ 17,500 lakh with an option to retain oversubscription up to ₹ 17,500 lakh, aggregating up to ₹ 35,000 lakh.
(i) For the purpose of onward lending, financing and for repayment of interest and principal of existing borrowings of the Company (At least 75%)
(ii) General Corporate Purposes (Maximum up to 25%)
Incred Financial Services Limited NCD Details:
| Open Date: | Jan 09 2023 |
| Close Date: | Jan 27 2023 |
| Issue Size: | ₹ 350 Cr. |
| Face Value: | ₹ 1000 Per NCD |
| Market Lot: | 10 NCD |
| Listing At: | NSE,BSE |
Promoters:
InCred Holdings Limited (erstwhile known as KKR Capital Markets India Limited), and Bhupinder Singh are the promoters of the company.
Financials:
| Particulars (in Lakh.) | 6M FY23 | March 2022 | March 2021 |
| Interest Income | 37,550 | 47,340 | 37,723 |
| Finance Cost | 17,031 | 21,947 | 15,276 |
| Net Interest Income | 20,519 | 25,393 | 22,448 |
| Loan Book | 4,72,960 | 3,73,226 | 255,360 |
| Net Interest Margins | 4.33% | 6.80% | 8.70% |
| Other Income | 585 | 3,624 | 698 |
| Total Income | 39,812 | 52,427 | 39,248 |
| Employee Benefit Expense | 8,664 | 13,921 | 9,449 |
| Other Expenses | 3,627 | 5,327 | 3,936 |
| Operational Cost | 12,291 | 19,248 | 13,385 |
| Provisioning | 1576 | 4352 | 8865 |
| PAT | 3,083 | 3,611 | 1023 |
| No. of Shares | 4,602 | 4,602 | 4,602 |
| EPS | 0.7 | 0.7 | 0.0 |
| Book Value | 52 | 24 | 23 |
Credit Rating:
The company has received rating of CRISIL A+/Stable by CRISIL Ratings Limited for the NCDs proposed to be issued pursuant to this Issue.
Interest Rates:
| Series 1 | Series 2 | Series 3 | Series 4 | |
| Frequency of Interest Payment | Quaterly | Annual | Quaterly | Annual |
| Nature | Secured | |||
| Tenor | 27 Months | 27 Months | 39 Months | 39 Months |
| Coupon Rate ( Retail ) | 9.45% | 9.80% | 9.65% | 10% |
| Effective Yield (% per Annum) | 9.78% | 9.82% | 10.00% | 10.02% |
| Amount on Maturity | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 |
Post Tax returns:
(i) Sold after Maturity The interest earned through NCDs will be added to the total income and will be taxed at 5%, 20%, and 30% respectively depending upon the income slab of an Individual.
(ii) Sold Before Maturity If you decide to sell the NCDs on the stock exchange, capital gains can also arise. If NCDs are sold within a period of 12 months from the date of allotment, short term capital gains/loss (STCG) will arise and if you decide to sell NCDs after a period of 12 months, the resulting gain or loss is called long term capital gains/loss (LTCG).
Recommendation:
Review and Recommendation of Incred NCD 2023 by IZ team is 5/10
Pros:
1. Strong leadership and experience investor base. Mr. Bhupinder Singh as a CEO of the company has worked for Deutsche Bank for over 20 years, most recently as head of the Corporate Finance division and co-head of the Fixed Income, Equities, and Investment Banking divisions for the Asia-Pacific region.
2. They have diversified loan book i.e. As on June 30, 2022, the AUM mix consists of personal loans (35%), secured school financing (11%), student loans (12%), lending to NBFCs (11%) and anchor & escrow backed business lines (18%).
3. They are planning to restructure the company wherein they will transfer the Retail loan portfolio to the new entity i.e. KKR India Financial Services Limited which will be controlled by 65% from Incred and 35% from KKR. New entity will be more capitalised.
Cons:
As of June 30, 2022, Incred's AUM was Rs 4676 crore, up from Rs 3804 crore a quarter before. This is a non-annualized growth of 23% during this time. But the AUM is spread out over seven different types of assets. This gives Incred the advantage of being diverse, but the company's operations and market position are still small in each asset class.
Lead Manager of Incred Financial Services Limited NCD:
- JM Financial Consultants Private Limited
Registrar of Incred Financial Services Limited NCD:
- Link Intime India Private Limited
Discussion on Incred Financial Services Limited NCD:
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Incred Financial Services Ltd NCD –
https://www.bseindia.com/markets/publicIssues/BSEcumu_demand.aspx?ID=2888
Retail 0.41x
HNI 1.40x
Non Institutional 0.03x
Institutional 0.29x
Total Subscription 0.61x
Incred NCDs subscription status –
Institutional 0.29x
Non Instituitional 0.02x
HNI 1.26x
Retail 0.16x
Total Subscription 0.49x