IIFL Samasta Finance Bonds: 2024 Issue

IIFL Samasta Finance Limited is a company that focuses on microfinance, providing loans to people in underserved communities. They offer various types of loans, including those for buying homes, family support, and starting businesses. The company is looking to grow and diversify its funding through bond sales.

With solid backing from its parent company, IIFL Finance, IIFL Samasta’s bonds—specifically called Secured, Redeemable, Non-Convertible Debentures (NCDs)—have gained much interest. These IIFL bonds offer good returns, ranging from 9% to 50% per year, depending on how long you invest, which can be anywhere from 2 to 5 years. This makes them attractive to wealthy individuals and other investors. However, there’s a concern because over 60% of their loans are given out in just 4 states. This concentration means that if those areas face economic troubles or changes in laws, it could impact the company’s stability. Plus, since they provide unsecured loans—meaning there’s no collateral—borrowers might be more vulnerable to issues like natural disasters or political changes.

Despite these risks, IIFL Samasta has a good history of paying back its debts on time and maintaining solid asset quality. Investors looking at IIFL bonds should consider these risks along with the attractive returns and the strong support from the parent company.

After introducing the subject, let’s focus on the specific highlights of the IIFL Samasta Finance Bonds. This section will cover the key features that set ‘IIFL Bonds 2024’ apart, along with information about its structure and potential appeal to investors.

Issue Highlights

IIFL Samasta Finance Limited has introduced redeemable non-convertible debentures (NCDs) with a secured rating. IIFL bonds present an alluring opportunity for investors seeking secured fixed-income options. Here are the main points of the offering:

• Issuer

IIFL Samasta Finance Limited is a prominent microfinance lending-focused non-banking financial company (NBFC).

• Instrument Type

Secured, Rated, Listed, Redeemable Non-Convertible Debentures (NCDs) are a type of instrument that provides fixed-income security backed by a company’s assets.

• Rating

Acuite has assigned the NCDs an AA/Stable rating, while CRISIL has given them an AA-/Positive rating. These ratings demonstrate a high degree of creditworthiness and low risk. The optimistic and stable outlooks reflect confidence in the company’s potential for expansion and long-term financial stability.

• Seniority

Since these NCDs are senior secured, they have a higher ranking than other types of debt. This means that in the event of default or liquidation, bondholders will have priority over the company’s assets.

• Face Value

Each NCD has a face value of ₹1,000, making it affordable for a wide range of investors.

• Base Issue Size

For 2024, the base issue size is ₹200 crores.

Also Read: How Inflation Affects Bond Prices?

• Option to Hold Oversubscription

The company may choose to hold onto oversubscription up to ₹800 crores, potentially increasing the issue size to ₹1,000 crores.

• Coupon Rate

The NCDs offer an attractive coupon rate of up to 10–50% for fixed-income investors.

• Tenor

Based on their investment preferences and liquidity requirements, investors can select a tenor of 24, 36, or 60 months.

• Date of Issue

The IIFL bonds will be issued in 2024.

• Minimum Investment

Retail investors wishing to participate in these secured IIFL bonds can do so with a minimum investment of ₹10,000.

These IIFL bonds focus on IIFL Samasta Finance’s robust portfolio of a credit-rated, high-yield secured fixed-income investment product. It seeks to attract a broad spectrum of investors, especially those looking for senior debt security and consistent income.

Tap Invest can help you unleash the potential of alternative investments. You can customize your investments to match your financial objectives. Tap Invest offers a seamless platform for you to explore these high-yielding opportunities, whether you’re a retail investor or a member of a larger organization. Start your investment with Tap Invest today and secure your financial future while supporting IIFL Samasta’s mission of financial inclusion.

After reviewing our summary of the bond highlights, it’s important to examine the precise terms associated with the NCD public issue. This section will describe the structural details, payment plans, and terms that investors should be aware of prior to committing.

Specific Terms of the NCD Public Issue

As stated below, the 2024 NCD public offering from IIFL Samasta Finance Limited offers revised terms that take into account recent financial and regulatory information.

• Credit Ratings

With an outlook of “Watch Developing,” CRISIL is rated AA-. Potential threats to the company’s financial profile are reflected in Acuite’s rating of AA (Rating Watch with Negative Implications).

• Issue Size

The allocations for the NCD issue comprise four categories:

• 10% for institutional investors.
• 30% for non-institutional investors.
• 30% for high net-worth individuals (HNIs).
• 30% for retail investors.

The NCDs will be listed and liquid, as they will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE), guaranteeing investors liquidity.

• Tenures and Interest Rates

A variety of NCD series are available, with terms varying from 24 to 60 months. Investors have options for payouts: monthly, annually, or as a lump sum at maturity. Because coupon rates differ between series, investors can choose whether they want regular payouts or a lump sum payment at maturity.

Also Read: Trading and Pricing of NCD Bonds Listed on NSE India

• Investor Eligibility

Institutional, non-institutional, HNI and retail investors can participate.

• Application Process

Investors must apply in dematerialized form using UPI or the ASBA facility for applications up to ₹5 lakhs.

• Financial Condition in 2024

As of September 2023, net non-performing assets (NPAs) amount to ₹47.26 crore, accounting for 0.57% of the loan book. The total NPAs amount to ₹174.91 crore, or 2.11% of the loan book. A substantial portion of the ₹8,071.56 crore in total borrowings is due in the near future.

This updated information explains the structure, financial standing, and important terms of IIFL Samasta’s 2024 NCD public issue to prospective investors.

Knowing the business behind the IIFL bonds is essential to maximizing their investment potential. This section will highlight the background, leadership, vision, and operational footprint of IIFL Samasta Finance Limited.

Company Profile

IIFL Samasta Finance Limited is a microfinance organization and Non-Banking Finance Company (NBFC) that specializes in offering financial services to women through the joint liability group (JLG) model. With its main office in Bangalore, it was founded in 2008 and has quickly grown. As of March 31, 2024, it has 1,648 branches across 22 states and one union territory (Puducherry) and employs 10,802 loan officers to serve over 3 million customers. IIFL Finance, a subsidiary of the company, holds the majority stake in the business.

Over time, IIFL Samasta has expanded its range of products to include consumer durable loans, two-wheeler loans, and microloans. These products not only help clients from underserved and rural areas access essential financial services but also address a broad range of financial needs.

Also Read: Understanding Bond IPOs: A Comprehensive Guide

IIFL Samasta is focused on establishing a strong risk management framework to guarantee the high caliber of its assets. Under the direction of Mr. Venkatesh N, the company’s managing director, who has more than 20 years of experience, IIFL Samasta aims to promote social change through financial inclusion by providing easily accessible loans and microfinance products to the underprivileged segments of society.

Discover the potential of your investments with Tap Invest. You can access high-yield investment options through Tap Invest, such as Unlisted Bonds, Asset Leasing, and more, which are intended to support financial inclusion efforts while offering attractive returns. Learn how you can increase your wealth and help sustain vital financial services by following Tap Invest on Instagram. 

After gaining a solid understanding of the company profile, we now turn our attention to IIFL Samasta Finance Limited’s financial highlights. This analysis will provide a better picture of the company’s stability and investment viability by offering a snapshot of its financial health, performance metrics, and growth indicators.

Financial Highlights

• IIFL Samasta Finance Limited’s 2024 financial highlights are listed below. As of March 31, 2024, the company’s gross assets under management (AUM) increased by 34.67% year over year to ₹14,211.28 crore, up from ₹10,552.12 crore in 2023.

• In fiscal year 2024, the Net Interest Margin (NIM) increased to 9.89% from 9.15% in 2023, demonstrating sustained improvement in interest income relative to interest expenses.

• IIFL Samasta demonstrated strong profitability growth in 2024, as evidenced by its profit after tax (PAT) of ₹503.04 crore, a notable increase from ₹128.18 crore in 2023.

Also Read: Invest in Electronica Finance Limited (EFL) Bonds on Tap Invest

• Strong evidence of financial stability can be seen in the company’s net worth, which increased from ₹1,272.85 crore to ₹1,919.99 crore by March 31, 2024. The company’s increased capital strength was reflected in the Tier 1 Capital Adequacy Ratio, which rose from 13.49% in 2023 to 17.67% in 2024.

• The company’s overall capital adequacy was further enhanced in 2024, with the Tier II capital ratio increasing to 6.32% from 3.65% in 2023.

As it continues to grow in the microfinance industry, these figures demonstrate IIFL Samasta’s excellent performance and sound financial standing.

The different investor categories for the IIFL bonds must be taken into account just as much as the financial aspects. This section will clarify the various segments of the bond issue to assist prospective investors in determining their place in the investment landscape.

Investor Categories

The IIFL Samasta Finance Bonds 2024 are allocated into four investor categories, each receiving a specific portion of the overall issue size:

• Category I

Institutional investors are allocated 10% of the issue size. This is intended for organizations such as insurance companies, scheduled banks, and public financial institutions. These organizations need to obtain permission to invest in non-convertible debentures (NCDs).

• Category II

Non-institutional investors, which include large corporate entities and associations not categorized as institutional investors, also receive 10% of the issue size.

• Category III

High Net-Worth Individuals (HNIs) make up this group, which receives 40% of the issue size. It focuses on individuals with substantial financial resources who are able to invest above a specific threshold.

• Category IV

Retail investors can access these IIFL bonds at lower minimum investment levels, usually around ₹10,000 (10 NCDs), thanks to the remaining 40% being set aside for them.

Also Read: AT1 Bonds: A Comprehensive Guide for Investors

Depending on the series and duration (24–60 months), these IIFL bonds offer yields as high as 10–50%, making them attractive investment options.

You can access bonds giving higher returns than IIFL Samasta Finance Bonds through Tap Invest, which are designed to accommodate different investor types. You can diversify your portfolio and optimize your investment potential with returns that can reach up to 17-18%. Don’t pass up this opportunity to make secure and prudent investments. Learn how to invest by watching Tap Invest’s videos on YouTube.

We now examine the rating justification offered by CRISIL and Acuite, building on our knowledge of the investment structure and target market. This analysis will provide important insights into the company’s creditworthiness by highlighting its operational strategies, financial standing, strengths, and weaknesses.

Rating Rationale

The IIFL Samasta Finance bond rating rationale identifies several strengths and weaknesses in the company’s operational and financial performance.

IIFL Samasta’s operations fall under the category of microfinance, making it susceptible to external risks such as local sociopolitical problems and regulatory changes. Historical challenges in this field, including those arising from the COVID-19 pandemic and recent elections, have highlighted this vulnerability.

Also Read: Credit Rating Agencies in India

While IIFL Samasta Finance has established a solid foundation with sufficient capitalization and supportive management, it faces significant obstacles due to geographic concentration and the inherent risks associated with the microfinance industry. Navigating these challenges and maintaining growth will require constant observation and strategic management.

In addition to our analysis of the company’s ratings, we will now look at the statistics on non-performing assets (NPAs). This section is essential for comprehending IIFL Samasta Finance Limited’s asset quality and risk exposure, which helps investors make better decisions.

NPA Statistics

IIFL Samasta Finance reported notable improvements in its non-performing asset (NPA) statistics as of March 31, 2024.

• Gross NPA

At ₹274.63 crore, the gross NPA accounts for 1.91% of the entire loan portfolio.

• Net NPA

According to reports, the net NPA is ₹47.76 crore, or roughly 0.33% of the total loans.

• ICRA Corporation

These numbers show a positive trend in the company’s asset quality compared to prior years. For example, the gross NPA was 2% in FY2023 and 3% in FY2022.

Also Read: Unlocking the Potential of Asset Leasing Investment

Better loan recovery efforts and the company’s use of efficient risk management techniques are the reasons for the decline in NPAs. The company’s growth and impressive performance in lowering NPAs put it in a favorable position within the microfinance industry.

Conclusion

If you’re looking for a reliable investment for ‘IIFL Bonds 2024’, you might want to check out IIFL Samasta Finance Bonds. These IIFL bonds are a great option for people who prefer fixed-income investments. They offer interest rates of up to 10% per year for a 60-month term and are suitable for both big organizations and individual investors.

Another plus is that IIFL Samasta has a large customer base. As of March 2024, they had 1,648 branches across 21 states and one union territory, serving 301 million customers. This strong presence, especially in rural areas, helps the company attract and keep a diverse customer base. The IIFL bonds also provide flexible investment options. You can choose from different terms—24, 36, or 60 months—and decide whether you want to receive payments monthly or annually.

Overall, if you’re looking for an investment that balances safety, good returns, and growth potential, IIFL Samasta Finance Bonds could be a solid choice. While this investment seems promising, you should consider factors like dealing with higher-risk clients and the fact that the company mainly operates in certain states. Changes in the local economy could affect its financial performance.

Check out Tap Invest, where you can explore a range of alternative investment choices beyond IIFL Samasta Finance Bonds, which offer high yields. Tap Invest provides dependable fixed-income investments with returns worth 17-18%, making it simple to diversify your portfolio. Don’t miss the opportunity to increase your profits while keeping your investments safe. Invest with Tap Invest right today.