Markets
BSE See NSE See 28,661.58
192.83 (0.68%)
collapse Related Readings collapse

India Infoline Investment Services – Buy

| 8/3/2011 6:08 PM Wednesday

In an environment of rising interest rates, banks are going to see some tough times. This is not only due to the squeeze in their Net Interest Margin (NIM), but also because various companies and NBFCs are tapping the market to raise funds in the form of debentures and bonds offering higher coupon rates.

One such company is India Infoline Investment Services Limited (IIISL), a 76.74 per cent subsidiary of India Infoline Limited (IIFL). The company is making a public issue of Secured Redeemable NCDs of face-value of Rs 1000 each, aggregating to Rs. 375 crore, with an option to retain another Rs. 375 crore, totaling Rs 750 crore. The NCD issue has options with a maximum coupon rate of 11.90 per cent per annum, and will be listed on NSE and BSE. The issue opens on August 4, 2011, and closes on August 12, 2011. These NCDs have been rated ‘[ICRA] AA- (stable)’ by ICRA and 'CARE AA-' by CARE, indicating a high degree of safety for the timely servicing of financial obligations.

The funds raised through this issue will be used for various financing activities, including lending, providing loans against securities and investments, repaying existing loans and for business operations, including capital expenditure, general corporate purposes and working capital requirements.

IIISL also has three 100 per cent subsidiaries, which are India Infoline Housing Finance, Moneyline Credit and India Infoline Distribution Company. IIISL offers a broad suite of lending and other financial products to clients, both retail and corporate. Its lending and other financial products comprise:

  • Mortgage Loans, which include Housing Loans and Loans against Property
  • Capital Market Finance,  which includes Loans against Securities, Promoter Funding, Margin Funding, IPO financing and other structured lending transactions
  • Gold Loans, which include finance against security of mainly used gold ornaments
  • Healthcare Finance, which includes finance for medical equipments and project funding in the healthcare sector
  • Personal Loans to individuals

The company operates in the mortgage loans business along with two of its subsidiaries, India Infoline Housing Finance and Moneyline Credit. Mortgage loans account for 60 per cent of the loan book, followed by capital market finance with a figure of 35 per cent, and gold loans with 4 per cent.

The following are the Operational and Financial Parameters (Consolidated):

Operational and Financial Parameters (Consolidated) (Rs/Crores)
FY 11
FY 10
FY 09
Loan Book
3288
1626
956
Total Borrowings
2293
1019
225
Net Worth
1341
1264
1210
Debt Equity ratio
1.71
0.81
0.19
Capital Adequacy ratio (%)*
29.95
47.65
97.77
Net NPA (%)
0.36
0.46
-
Net Interest Income
226
174
166
Yield on Earning Assets (%)
14.31
17.01
15.28
Cost of funds (%)
9.43
9.52
9.67
Net Interest Spread (%)
4.88
7.49
5.61
Net Interest Margin (%)
7.17
15.3
13.95
Cost to average assets (%)
9.04
8.59
8.16
Cost to Income (%)
74.2
67.26
63.9
RoA (%)
2.16
2.94
3.7
*Standalone

The basic question that would arise is, should one go for the NCD? If yes, which option one should choose from the three being offered by the company? Our answer is that one should go for the NCD, considering the coupon rate offered by the company. If one is not looking at yearly interest, then we would suggest going for Option B, where holding anything more than one year would attract only 10 per cent capital gains against income tax rate, based on your taxable income, which would be in the region of 30 per cent. In other words, the post-tax returns would be best if one goes for Option B.

Options
I
II
III
Tenure
36 months
40 months
60 months
Frequency of Interest Payment
Annually
N.A.
Annually
Minimum Application (Rs)
Rs 5000
Coupon (%)
11.70% p.a.
N.A.
11.90% p.a.*
Redemption Amount (Rs/per NCD)
N.A.
Rs 1446.18
N.A.
* 11.70% p.a. for applicants other than Resident Individuals and Hindu Undivided Families (HUF)

Find More Articles on: Research, IPO Analysis

DSIJ
Mindshare

Markets may open flat to positive amidst subtle global cues and caution ahead of the high voltage domestic political stir

Markets may open flat to positive amidst subtle global cues and caution ahead of the high voltage domestic political stir

At 8:06 am, SGX Nifty index gained 16 points to 8,892, indicating a positive start for Indian equities.

Coal imports decline 22% in January

Coal imports decline 22% in January

Coal imports by India declined 22% in January 2017 to 14.31 million tonnes from 18.28 million tonnes in January last year. The drop in imports was mainly due to drop in demand from state distribution companies (discoms) as they were saddled with oversupplies.

TCS to buyback shares at 13.7% premium

TCS to buyback shares at 13.7% premium

Tata Consultancy Services (TCS) has approved buyback of up to 5.6 crore equity shares at a price of Rs 2850. The company’s aggregate amount for the buyback will not exceed Rs 16,000 crore. 

Overnight Digest- Stocks to look out for on February 21

Overnight Digest- Stocks to look out for on February 21

The stocks which could witness significant movement on February 21 are TVS Motor Company, Siemens, Intellect Design Arena, Rural Electrification Corporation, Castrol India/ ITD Cementation India.

Havells-Lloyd deal: what should a retail investor do now

Havells-Lloyd deal: what should a retail investor do now

In a significant development on the very first day of the week, Lloyd Electric & Engineering sold its consumer durable business to Havells India at Rs 1550 crore.

Markets start the week on a positive note

Markets start the week on a positive note

Indian markets started the week on a positive note. Both stock exchanges were able to surge more than half a per cent in Monday’s trading session.

Jindal Steel & Power touches 52-week high

Jindal Steel & Power touches 52-week high

The positive news of asset optimisation enthused traders and investors and the company's stock gained as much as 9.95 per cent and touched 52-week high in intra-day trade to Rs 102.20 on the Bombay Stock Exchange.

Ten stocks close to their 52-week low

 Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 1.01 p.m. on February 20.

Dilip Buildcon Bags Tuljapur-Ausa Four-laning project worth Rs 911 Cr.

 Dilip Buildcon Bags Tuljapur-Ausa Four-laning project worth Rs 911 Cr.

The company’s share is currently trading at Rs. 293.1, up by 19.35 points or 7.07 per cent from the previous close of Rs 273.75.

Marksans Pharma hits upper circuit

Marksans Pharma hits upper circuit

Marksans Pharma has been steadily trading in green on Monday's trading session owing to successful completion of its manufacturing plant inspection.

Market
CHIT CHAT

What is your view on markets today?

200  Characters Remaining.
Please LOGIN  to post your comments or Click here to go back.
Harsh Boricha Feb 20 07:41PM
tata products guys
shubham soni Feb 20 03:37PM
It which sector bro
Manish Tyagi Feb 20 03:34PM
tcs
DEVENDRA SINGH Feb 20 03:31PM
IT sector boom boom
shubham soni Feb 20 03:05PM
Kalyan steel

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »