Indiabulls Housing Finance Board Approves Fundraise Via NCDs, Warrants

The board of Indiabulls Housing Finance Ltd. has approved fundraising plan through issuance of non-convertible debentures and warrants.

The company will issue secured and unsecured redeemable NCDs in one or more tranches, by way of a public issue or private placement of up to Rs 10,000 crore, the exchange filing said.

The board also approved fundraising plan of NCDs along with warrants through qualified institutional placement up to rupee equivalent of $1 billion, the statement said.

After being in consolidation mode for the last few quarters, the company plans to start growing its retail book in a “meaningful way”, Ashwini Hooda, deputy managing director of Indiabulls Housing Finance, told BloombergQuint in an interview.

“We are targeting over Rs 40,000-crore disbursements over the next 12 months. It will be 100 percent retail-led growth so we will do only home loan and LAP (loan against property) and no wholesale loans,” he said.

The housing financier also posted its earnings for the quarter ended September. The company’s net profit fell 32 percent year-on-year to Rs 709.5 crore. Its loan book declined 28.5 percent to Rs 82,135 crore in the period.

This comes as India’s non-bank lenders are facing a liquidity crunch since the collapse of Infrastructure Leasing & Financial Services Ltd. last year. The country’s real estate sector is also going through a slowdown, resulting in stalled projects and unsold inventory.

Last month, the Reserve Bank of India rejected the company’s plan to merge with Lakshmi Vilas Bank Ltd., blocking a route that may have helped other struggling non-bank financiers get better access to liquidity.

Q2 Results (YoY)

• Net Interest Income fell 26.3 percent to Rs 1,252.4 crore.
• Interim dividend of Rs 7 per equity share declared.
• Gross NPAs stood t 1.51 percent versus 1.47 percent. (QoQ)
• Net NPAs at 1.07 percent versus 1.1 percent. (QoQ)

Concall Highlights

• Pursuing a new asset-light retail focused business model by originating loans through a 40-40-20 split between co-origination, securitisation and smart-city loans.
• Have filed a perjury in context of allegations against us, next date of hearing has been expedited to Nov. 29 at our request, was supposed to happen in December earlier.
• The erroneous bond trade was to the tune of Rs 200 crore, not currently looking at tapping the bond market due to shallowness of the Indian bond market
• Disbursements during the quarter at roughly Rs 7,000 crore, focused on getting the disbursements back to Rs 3,000-3,500 crore a month over the course of next few months.
• Have sought feedback from the regulator on buyback, not keeping any timeline for the same.
• Oaknorth investment delivered six times returns in last four years. Not a desperate seller, nothing in India business too that requires buffer funds from Oaknorth sale. Though a transaction can happen pretty quickly there basis the enquiries we are getting from various players.
• Management has invested a substantial time in lowering the cost-to-income ratio and it will continue to taper down very hastily going forward.