Indiabulls Housing Finance announces pre-mature redemption of its NCDs; repays Rs 1,64,000 crore!

The company has consistently maintained adequate liquidity in cash, cash equivalents, and investments to cover its short- to mid-term debt obligations.

On Monday, the Indian benchmark indices experienced a downward trend, primarily due to the ongoing Israel-Palestine conflict. Amidst this turbulence in the stock market, one company stands out with its impressive performance and has become a subject of attention and excitement. This company is Indiabulls Housing Finance Ltd (IBHFL).

Indiabulls Housing Finance Ltd (IBHFL) is a prominent housing finance company in India. Its current legal entity was established on April 1, 2012, through a reverse merger with Indiabulls Financial Services Ltd. The merger process concluded on March 8, 2013, after receiving approval from the Delhi High Court on December 12, 2012. Following the merger, IBHFL continues to operate as a housing finance company registered with the National Housing Bank.

The company, along with its subsidiary Indiabulls Commercial Credit Ltd (ICCL), primarily focuses on asset classes such as mortgages and commercial real estate. As part of an institutionalization effort, the promoter group's ownership stake in the entity was reduced to less than 1 per cent as of June 30, 2023, and the company is now professionally managed. Additionally, the company has embarked on a rebranding initiative aimed at simplifying its corporate structure and emphasizing its commitment to retail mortgage lending.

As of now, the stock of IBHFL is trading at approximately Rs 176 on the National Stock Exchange (NSE), showing a gain of nearly 2.5 per cent. The main driving force behind this upward movement in the stock price is the company's recent purchase of bonds with maturities up to March 31, 2024.

IBHFL has issued an offer to all debenture holders for the premature redemption of its Non-Convertible Debentures (NCDs) maturing before March 31, 2024. The Asset Liability Management Committee (ALCO) of the company has made this offer to acquire NCDs maturing within this timeframe through negotiated trades on the exchange with NCD holders. The company intends to hold these acquired NCDs as treasury stock until their respective maturities.

Since September 2018, the company has repaid a substantial amount, totaling Rs 1,64,000 crore on a gross basis and Rs 85,500 crore on a net basis. As of the end of September, the company's borrowings stood at approximately Rs 35,000 crore, and its net debt-to-equity ratio was 1.7x. This demonstrates the robustness of the portfolio managed by Indiabulls Housing, even in the face of challenges like the pandemic and a challenging real estate market in India. The company has consistently maintained adequate liquidity in cash, cash equivalents, and investments to cover its short- to mid-term debt obligations.

IBHFL has a proactive approach to Asset Liability Management (ALM) and plans ahead for situations involving clustered repayments, as was seen in Q2FY24. In such instances, where regulatory permissions allow, the company uses its balance sheet liquidity to pre-pay or buy back outstanding debt, as it is currently doing. In cases where regulations don't permit such actions, such as the repayment of External Commercial Borrowings (ECBs) amounting to USD 270 million (Rs 2,232 crore) in the previous quarter, the company has voluntarily created earmarked, trustee-managed Fixed Deposits (FDs) a year in advance of repayment dates to ensure the availability of funds.

Furthermore, the company's asset-light model has fully matured, and it has established co-lending relationships with eight partner banks, where IBHFL plays a strategically significant role in their total disbursals. Importantly, this asset-light co-lending approach allows the company to grow and earn on the entire Assets Under Management (AUM) without incurring significant ALM risk. Over the past two years, the company has been actively nurturing Public Issuances of NCDs aimed at retail investors, providing a stable and granular source of borrowings.

The company will continue to evaluate opportunities for further premature redemption of its NCDs to enhance liquidity for retail investors. Despite its growth in disbursals, IBHFL's ample liquidity positions it to take proactive steps in ALM management, ensuring its continued stability and success in the market.

Disclaimer: The article is for informational purposes only and not investment advice.