“Why to wait for the right time – Make your time right by investing in Navi FinServ Limited NCD IPO”
Navi FinServ Limited IPO coming soon. Stay prepared for the bidding. It is a golden opportunity for investors looking for safe investment and high yield in limited tenure. Navi FinServ Limited IPO issue opens on 23rd May with a Face value of Rs. 1000 each.
The issue price is Rs. 1000 per NCD and the minimum investment allowed is Rs. 10000. The company has IND A/ Stable rating and assures a maximum yield of 9.8%.
About the Issuer
NAVI FINSERV LIMITED NFL, a wholly-owned subsidiary of the Navi group (the main holding company is NTL), holds a 100% stake in CIFCPL, which has been in operation since 2009. The consolidated AUM of the lending vertical stood at INR 36.5 billion in end-December 2021.
Navi FinServ with its systematic and focused approach strives to meet the borrowing needs of middle-income families and aims to be a Pan India Financial Services Company and provide the full spectrum of financial services, by developing various types of financial products.
Navi FinServ strongly believes that the financial products will help in the empowerment and capacity building of the middle-income families
Products
- Digital Personal Loans
- Homes Loans
- Microfinance Loans
- Loans against property
Subsidiaries
- Chaitanya India Fin Credit Pvt Ltd (CIFCPL)
Chaitanya has its inspiration in an NGO of the same name from 2004 with a focus on support for rural livelihood activities and rural education. Chaitanya the NBFC was formed in 2009.
After transforming itself as NBFC-MFI in the year 2009, Chaitanya quickly began its operations with an amicable goal of helping the many low-income families who have been traditionally away from the formal banking sector. Today, Chaitanya operates in 10 states of the country serving over 6 Lakh clients. With an aim to be a Pan India Financial Institution providing loans meeting the financial service needs of the low and middle-income rural population, encouraging them to be part of the formal economic sector.
AUM: 14,486.37 (Rs. in millions)
GNPA: 1.08%
NPA: 0.8%
About the NCD Issue (company stats, standings, etc.)
Issue of Secured, Redeemable, Non-Convertible Debentures
Registrar of Issue – Link Intime India Private Limited
Issue size – Public issue of Secured, Redeemable, Non-convertible Debentures of the Face value of ₹ 1000 each for an amount up to ₹ 300 Crores (“Base Issue Size”) with green shoe option of ₹ 300 Crores aggregating up to ₹ 600 Crores.
Issue Break-up:
| CATEGORY | ALLOCATION (In %) | Amount (In Rs. Crores) | |
|---|---|---|---|
| BASE ISSUE | ISSUE | ||
| Institutional Investors | 20% | 60 | 120 |
| Non- Institutional Investors | 20% | 60 | 120 |
| HNI | 30% | 90 | 180 |
| Retail Institutional Investors | 30% | 90 | 180 |
| TOTAL | 300 | 300 | 600 |
More About the Issue
| ISSUE OPENS | 23rd May, 2022 |
| ISSUE CLOSES | 02nd June, 2022 |
| ALLOTMENT | 08th June, 2022 |
| FACE VALUE | ₹ 1,000 per NCD |
| ISSUE PRICE | ₹ 1,000 per NCD |
| NATURE OF INSTRUMENT | Secured, Redeemable, Non-Convertible Debentures |
| MINIMUM APPLICATION | ₹ 10,000 (10 NCD) and in multiples of ₹ 1,000 (1 NCD) thereafter. |
| LISTING | BSE and NSE |
| RATING | IND A/ Stable |
*Issue may close on such earlier date or an extended date as may be decided by the Board of Directors of the Company or Securities Issuance Committee thereof.
THE ISSUE STRUCTURE
| Series | I | II | III | IV* | ||||||
| Frequency of Interest payment | Monthly | Annual | Monthly | Annual | ||||||
| Minimum Application | ₹ 10,000 (10 NCDs) across all Series | |||||||||
| Through various modes availabe | ₹ 1,000 (1 NCD) | |||||||||
| Face Value/ Issue Price of NCDs | ₹ 1,000 | |||||||||
| Type of Instrument | Secured NCDs | |||||||||
| Tenure | 18 Months | 18 Months | 27 Months | 27 Months | ||||||
| Coupon (% per annum) for NCD Holders in Category I, II, III and IV Investors | 9.20% | 9.50% | 9.40% | 9.75% | ||||||
| Effective Yield (% per annum) for NCD Holders in Category I, II, III and IV In | 9.59% | 9.57% | 9.80% | 9.77% | ||||||
| Mode of Interest Payment | Through various modes available | |||||||||
| Amount ( NCD) on Maturity for NCD Holders in Category I, II, III and IV Investors | ₹ 1,000 | ₹ 1,000 | ₹ 1,000 | ₹ 1,000 | ||||||
| Maturity / Redemption Date (from the Deemed date of Allotment) | 18 Months | 18 Months | 27 Months | 27 Months | ||||||
| Put And Call Option | Not Applicable | |||||||||
| *The Company shall allocate and allot Series IV NCDs wherein the Applicants have not indicated the choice of the relevant NCD Series. | ||||||||||
Company Financials
Key Strengths
- Large Capital Base; Deployment Likely Across Various Segments:
NFL, which is also a holding company of the Navi Group’s non-banking financial company – a microfinance institution (NBFC-MFI; Chaitanya India Fin Credit Limited), is a lending subsidiary of NTL. NTL was set up to invest in and provide technological platforms to the financial companies of the group. The company was set up by the founder and ex-promoter of Flipkart, Sachin Bansal, who infused INR 40 billion into various financial ventures of the group in FY20. Apart from the lending business, the group also owns a general insurance company (Navi General Insurance), which was acquired from Dewan Housing Finance Limited in FY20.
In addition, the group has broking and investment advisory licences and has also acquired the asset management business (Navi AMC Limited) from Essel Finance AMC. NTL has about INR40 billion of equity that is available for financial services. The company had infused INR 11.5 billion in NFL as of December 2021, INR 4.87 billion in the insurance vertical and INR 1.5 billion in the asset management company. - Eminent Board and Advisors:
With the company expanding its operations, it has set up an experienced board with Anand Sinha (former deputy governor of the RBI) as the independent director at NTL. It has also enlisted the services of the veteran banker, Paresh Suthankar, as an advisor to the board for lending, banking and other businesses. NFL has appointed Riya Bhattacharya as the new chief executive officer who has experience in investing and building companies. Moreover, the company has appointed a new Chief Financial Officer Divyesh Jain who has 11 years of experience in the finance domain. NFL also has a lending head and two product heads, individually looking at housing loan and digital loan segments. While the management team has experience in the areas of microfinance, banking, retail lending and technology, Ind-Ra expects the team to be expanded and strengthened as the lending operations and product suite expand over the medium term. - Reserve Equity to Support Business Requirements:
Of the INR 40 billion corpus, NTL had infused INR 18 billion, with 64% of it mainly infused in the lending businesses, as of December 2021, with the balance being available for equity infusion, further expansion in related verticals, and contingent support to group companies, as and when required. This surplus has mostly been lent to NFL through interest-free debentures, and subsequently invested largely in capital markets. The track record of the promoters provides the group with substantial experience in fundraising.
Key Weaknesses
- High Disbursement to Outstanding Ratio:
NFL offers digital personal loans up to a ticket size of INR 2 million; in the agency’s opinion, this is the easiest product to build through purely digital means. The NFL also introduced home loans (up to INR 50 million) in December 2020. In 3QFY22, NFL disbursed INR12 billion and CIFCPL INR 8.4 billion, resulting in disbursements/outstanding assets under management (AUM) of 98% for NFL and 77.3% for CIFCPL at 9MFYE22. - Eminent Board and Advisors:
NFL has almost reached a monthly run rate of INR 5 billion in disbursements, which would increase even further in the near term. While still being under the leverage target, the unseasoned portfolio could throw up material credit costs. However, the company has made important developments in analytics and processing algorithms that resulted in lower early delinquencies in the second and third-quarter disbursement cohorts compared to FY21. - Leverage Increasing:
The company is ramping up its lending businesses, including the micro-finance business through CIFCPL. While the agency expects the consolidated adjusted leverage (total external lending vertical debt /infused equity of INR 11.5 billion) of the lending vertical to increase over the medium term (December 2021: 2.3x; June 2021: 1.1x), the company intends to cap it at 3.5x. The consolidated leverage including internal debt at end-December 2021 stood at 3.45x and would have further increased at end-March 2022. Simultaneously, the company plans to maintain strong liquidity buffers to face any liquidity crunch that may arise, factoring in the uncertain environment. However, the leverage at the microfinance subsidiary increased to 4.1x in December 2021 from 3.1x in FY21.
How to invest in Navi FinServ Limited NCD IPO May 2022
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How to buy Navi FinServ Limited NCD IPO May 2022?
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