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How Indiabulls Housing Finance is Deleveraging its Balance Sheet

Indiabulls Housing Finance to reduce debt
by 5paisa Research Team 27/09/2021

In the last few years, most NBFCs including those in the housing finance space, have been under pressure at two levels. Firstly, there was an asset liability mismatch in most books as HFCs were borrowing short end and lending for homes, which is normally long end.

Secondly, most NBFCs were facing cash flows problems in servicing their loan repayments, putting them at solvency risk. That was because, in the midst of the liquidity crunch, cash flows were not coming in regularly.

One of the NBFCs that has put in an effort to rectify this problem and deleverage the balance sheet is Mumbai-based Indiabulls Finance. The stock had come under a lot of pressure over NPA concerns, its exposure to Yes Bank and asset liability mismatch.

It has cleaned up its balance sheet to become fully matched in terms of ALM (asset liability management). It has also become significantly positive on cash flows, to the extent that it has also started creating reserves for future redemptions.

To underscore its commitment, Indiabulls Housing Finance recently repaid NCDs worth Rs.7,076 crore ahead of schedule. This included a sum of Rs.6,576 crore borrowed by Indiabulls Housing and its subsidiary ICCL in Sep-16 and Sep-18 respectively.

There was also an NCD of Rs.500 crore issued by Indiabulls Housing way back in September 2011. These NCDs aggregating to Rs.7,076 crore were all repaid ahead of schedule. In dollar terms, the amount repaid is around $960 million.

In addition, Indiabulls has gone one step ahead and created a special redemption reserve for bonds maturing in May 2022 worth $350 million. Indiabulls will transfer 75% of these maturity proceeds to a debt repayment trust managed by IDBI Trustee Company.

The first tranche has already been transferred in Aug-21. The second tranche will be transferred in Nov-21 and the last tranche in Feb-22. Three-fourth of the redemption proceeds will be set aside 3-months ahead of maturity date.

Indiabulls not only wants to prove a point on its solvency but also wants to give comfort and reassurance to bond holders and shareholders that the company’s finances are in fine fettle. This should give a boost to sentiments.

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Aditya Birla Sun Life AMC IPO Note

IPO
by 5paisa Research Team 27/09/2021

Aditya Birla Sun Life AMC Ltd, is the fourth largest asset management company in India in terms of assets under management (AUM) and the largest non-bank mutual fund. It has total assets under management of Rs.275,454 crore as of the end of June quarter. More than 50% of its AUM comes from institutional customers, which is one of the reasons why the AMC is very strong in terms of non-equity AUM.

Aditya Birla Sun Life AMC Ltd currently offers a total of 135 mutual fund schemes consisting of 35 equity schemes, 93 debt schemes, 2 liquid schemes and 5 ETFs. In addition, it also offers 5 domestic fund of funds (FOF). Apart from a strong customer base and aggressive agent network, Aditya Birla Sun Life AMC Ltd also has the advantage of the Birla brand name, which has been in existence in India for over 100 years.

Below are the terms which you should know about Aditya Birla Sun Life AMC IPO:

Key terms of the IPO issue of Aditya Birla Sun Life AMC Ltd
 

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

29-Sep-2021

Face value of share

Rs.5 per share

Issue Closes on

01-Oct-2021

IPO Price Band

Rs.695 - Rs.712

Basis of Allotment date

06-Oct-2021

Market Lot

20 shares

Refund Initiation date

07-Oct-2021

Retail Investment limit

14 Lots (280 shares)

Credit to Demat

08-Oct-2021

Retail limit - Value

Rs.199,360

IPO Listing date

11-Oct-2021

Fresh Issue Size

Nil

Pre issue promoter stake

100.00%

Offer for Sale Size

Rs.2,768.26 crore

Post issue promoters

86.50%

Total IPO Size

Rs.2,768.26 crore

Indicative valuation

Rs.20,505 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

50%

Retail Quota

35%

Data Source: IPO Filings

Here are some of the key merits of the Aditya Birla Sun Life AMC business model

i) Trusted brand with over 100 years of brand existence.

ii) Largest non-bank mutual fund in India in terms of AUM.

iii) Good mix of retail and institutional clients as well as equity and debt schemes.

iv) Strong network of brick-and-click with 66,000 MFD and 240 national distributors.

v) Quarterly AUM grew at 14.55% CAGR between 2016 and 2021.
 

Also Check:  Aditya Birla Sun Life AMC IPO : 7 Things to Know About
 

How is the IPO being structured?

Currently, Aditya Birla Sun Life AMC Ltd is 51% owned by Aditya Birla Capital and 48% by Sun Life PLC. The entire issue of 388.80 lakh shares (including 28.51 lakh shares by Aditya Birla Capital and 360.29 lakh share by Sun Life AMC) will be an offer for sale in which both the promoters viz. Aditya Birla Capital and Sun Life AMC will offer shares in the OFS. Here is how the shareholding will look like before and after the IPO.

 

Particulars

Pre-IPO Holding

Pre-IPO (%)

Post-IPO Holding

Post-IPO (%)

Aditya Birla Capital

146,879,680

51%

144,028,800

50.01%

Sun Life PLC

141,120,000

49%

105,090,880

36.49%

Public

-

-

38,880,000

13.50%

Total Shareholding

287,999,680

100%

287,999,680

100.00%

Data Source: Company RHP

Thus post the offer for sale completion, the stake of ABCL will go down marginally, but the stake of Sun Life PLC comes down sharply from 49% to 36.49%. The public will be holding the divested 13.50% stake.
 

Financials of Aditya Birla Sun Life AMC Ltd Finance
 

Financial Parameters

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Total Income

Rs.1,205.84 cr

Rs.1,234.77 cr

Rs.1,407.25 cr

Net Profit

Rs.526.28 cr

Rs.494.40 cr

Rs.446.80 cr

Net Worth

Rs.1,704.61 cr

Rs.1,316.87 cr

Rs.1,220.57 cr

Net Profit Margins

43.64%

40.04%

31.75%

RONW (%)

30.87%

34.54%

36.61%

Data Source: Company RHP

The revenues overall are down over the last 3 years but that is due to the lower expense ratio insisted upon by SEBI. That has been partially compensated by the higher equity flows, but the shortfall still remains. However, the profits have been boosted through leaner operations, digital initiatives and lower asset impairment requirements.

Investment Perspective for Aditya Birla Sun Life AMC Ltd

This will only be the fourth AMC to be listed and here are some investment arguments.

a) In terms of relative valuations, it is cheaper than HDFC AMC and Nippon Mutual Fund but more expensive than UTI Mutual Fund. Lower equity AUM will be an issue.

b) The indicative market cap of Birla AMC at Rs.20,505 crore is about 7.5% of the total assets under management. This is at par with the rate at which most sale deals have happened, so the headroom may be limited.

c) In the last few months, there has been a distinct shift towards hybrids, gold funds and passive funds. That is likely to maintain the pressure on the top line growth of the mutual fund industry in general.

At the current market cap of Rs.20,505 crore the IPO does appear fully valued. It may not be a value enhancer in the short term, but over the long term it still remains a veritable play on the big financial savings shift happening in India.

Next Article

Upcoming IPOs to raise Rs.45,000 Crore in Oct-Nov

Upcoming IPOs
by 5paisa Research Team 27/09/2021

The first 6 months of the fiscal year 2021-22 will end with collections of Rs.78,520 crore. If you exclude Birla Sun Life opening on 29th Sep as well as the Power Grid INVIT and the Brookefield REIT, still Rs.64,200 crore has been collected this fiscal. Investors will get a picture of the second half in the first two months of October and November.

The months of October and November will set the tone for the IPO collections in the rest of the year. Nearly 50% of the collections of the first half came in July and August with September being a relatively quiet month. It is now estimated that nearly Rs.45,000 crore could be raised across 40 IPOs in October and November. We are not counting the Rs.16,600 crore Paytm IPO, which could move to Dec-21 or Jan-22.

In October and November, you can expect a mix of digital and non-digital IPOs as under.
 

Digital IPOs

IPO Amount

Non-Digital IPOs

IPO Amount

Policybazaar

Rs.6,017cr

Emcure Pharma

Rs.4,500cr

Nykaa

Rs.4,000cr

CMS Infosystems

Rs.2,000cr

MobiKwik Systems

Rs.1,900cr

Northern Arc Capital

Rs.1,800cr

Ixigo

Rs.1,600cr

Sapphire Foods

Rs.1,500cr

RateGain Travel Tech

Rs.1,200cr

Fincare SFB

Rs.1,330cr

 

 

Sterlite Power

Rs.1,250cr

 

 

Supriya Lifesciences

Rs.1,200cr


The above table is just an illustrative list of some prominent names. In total, it is expected that 40 companies will be raising close to Rs.64,000 crore via IPOs in next 2 months. It will also set the tone for larger IPOs like Paytm as well as the divestment of LIC and BPCL in the Mar-22 quarter.

For now, this promises to be the best year for IPO collections in history, beating the record collections in the year 2017. However, the 2017 IPO boom was dominated by the mega insurance IPOs of GIC Re, New India Assurance, HDFC Life, SBI Life and ICICI Lombard. This time it is more of a technology driven IPO boom. It remains to be seen how enthusiastically the market is able to absorb the supply of larger IPOs. That will be the acid test.

Also Read:

1. List of Upcoming IPOs in 2021

2. Paytm IPO Update

3. 8 Interesting facts about Paytm

Next Article

BTST Trading Tips for Today: 28th September, 2021

BTST Trading Tips for Today: 28th September, 2021
by 5paisa Research Team 27/09/2021

5paisa analysts bring the best intraday ideas, short-term ideas and long-term ideas for you. In the morning we provide best momentum stocks to buy today, while in the last trading hour we provide Buy Today Sell Tomorrow (BTST) and Sell Today Buy Tomorrow (STBT) ideas.

BTST Trading Ideas for Today

1. BTST : FINPIPE 

- Current Market Price: Rs.208

- Stop Loss: Rs.205

- Target: Rs.214

 

2. BTST : DRREDDY SEP FUT

- Current Market Price: Rs.4,808

- Stop Loss: Rs.4,787

- Target: Rs.4,865

 

3. BTST : STOVECRAFT

- Current Market Price: Rs.1,034

- Stop Loss: Rs.1,015

- Target: Rs.1,095

 

4. BTST : CONFIPET

- Current Market Price: Rs.83

- Stop Loss: Rs.81

- Target: Rs.88

 

5. BTST : JBCHEMPHARM

- Current Market Price: Rs.1,922

- Stop Loss: Rs.1900

- Target: Rs.1978
 

Next Article

5 Stocks to Buy Today: September 28, 2021

5 Stocks to Buy
by 5paisa Research Team 27/09/2021

Every morning our analysts scan through the markets universe and chose the best momentum stocks to buy today. The stocks are recommended from a wider list of momentum stocks and only the best ones make it to the top 5 list. We also update on the performance of earlier recommendation every morning to help you with your trading journey. Read on to know the momentum stocks to buy today. The average holding period could be between 7-10 days on average.

List of 5 Stocks to Buy Today

1. Indian Railway Catering And Tourism (IRCTC)

Indian Railway Catering and Tourism Corporation (IRCTC) is an India-based company engaged in offering Internet ticketing, catering and tourism. The Company is engaged in offering catering and hospitality services at stations, on trains and other locations. Its segments include Catering and Hospitality; Internet Ticketing; Travel and Tourism, and Packaged Drinking Water (Rail Neer).

IRCTC Stock Details for Today: 

- Current Market Price: Rs.3,835

- Stop Loss: Rs. 3,740

- Target 1: Rs. 3,900

- Target 2: Rs. 4,050

- Holding Period: One week

5paisa Recommendation: Sideways Momentum likely to end, thus making it to the top stocks to buy list. 

 

2. Prestige Estates (PRESTIGE)

Prestige EstatesStock Details for Today: 

- Current Market Price: Rs. 495

- Stop Loss: Rs. 481

- Target 1: Rs. 507

- Target 2: Rs. 525

- Holding Period: 1 week

5paisa Recommendation: Our technical analysts observe positive momentum, thus recommending this stock as the best stock to buy today. 

 

3. India Glycos (INDIAGLYCO)

India Glycos Stock Details for Today: 

- Current Market Price: Rs. 763

- Stop Loss: Rs. 744

- Target 1: Rs.781

- Target 2: Rs. 809

- Holding Period: 1 week

5paisa Recommendation: Our technical experts expects further buying in the stock and recommends buying this stock.

 

4. Nazara Technologies (NAZARA)

Nazara Technologies Stock Details for Today: 

- Current Market Price: Rs. 2,264

- Stop Loss: Rs. 2,200

- Target 1: Rs. 2,335

- Target 2: Rs. 2,450

- Holding Period: 1 week

5paisa Recommendation: Positive chart structure in stock is observed by our technical experts and thus making this stock as one of the best stocks to buy today.

 

5. Indo Count (ICIL)

Indo Count Stock Details for Today: 

- Current Market Price: Rs. 299

- Stop Loss: Rs. 291

- Target 1: Rs. 308

- Target 1: Rs. 321

- Holding Period: 1 week

5paisa Recommendation: Our technical experts see a strong volume in the stock hence making this stock best stock to buy.

 

Share Market Today

SGX NIFTY: 

SGX Nifty indicates positive opening for Indian markets. SGX Nifty is at 17,939.80 levels, higher 77.75 points. (Updated at 7:45 AM).

International Markets:

US Market:

US markets ended mixed as Dow Jones closed higher by 70 points while Nasdaq closed lower by 77 as bond yields rose to 4-month highs.

US 10-year yield hits 1.48% which prompts profit booking in technology stocks while banks see buying. The oil acts as a catalyst for higher yields as WTI hits 2-year highs with the inflation threat now a reality.

 

Asian Market:

Asian markets opened in the red led lower by the Japanese 'Nikkei' which was down 200 points in early trade.

Near-term profit booking could be the order for this week and beyond as markets react to higher crude, inflation, and equities at an all-time high.

Chinese stocks may be underperformers as money flows see institutional exit and entry into other Asian markets.

 

Disclaimer: The above report is compiled from information available on the public platforms.

Next Article

Paradeep Phosphates gets SEBI approval for IPO

Paradeep Phosphates gets SEBI approval for IPO
IPO
by 5paisa Research Team 28/09/2021

The Rs.1,255 crore fresh issue plus OFS, for which Paradeep Phosphates had filed the DRHP with SEBI in August 2021, has got SEBI approval for the IPO. The next step would be to factor in any comments of SEBI and then file the Red Herring Prospectus (RHP) with the Registrar Of Companies (ROC). The issue date is normally finalized after the RHP filing.

Paradeep Phosphates is currently 80.45% owned by Zuari Maroc Phosphates Private Limited and 19.55% owned by the Government of India. The overall issue will consist of Rs.1,255 crore fresh issue by the company to raise capital as well as an offer for sale of 12 crore shares by the existing shareholders viz. Zuari Maroc and Government of India.

As per the DRHP filed with SEBI, the government of India will offer 11.25 crore shares while Zuari Maroc Phosphates will offer 75 lakh shares as part of the offer for sale portion. The government stake will substantially reduce in this OFS and will add to its disinvestment receipts for fiscal year 2021-22. India has a divestment target of Rs.175,000 crore for FY22.

While the OFS portion will not alter the equity capital of the company, the fresh issue portion of Rs.1,255 crore will lead to expansion of the equity base and the dilution of earnings per share. The fresh issue proceeds will be used by the company for acquiring a fertilizer facility in Goa and repaying some of its debt to deleverage the balance sheet.

Paradeep Phosphates manufactures complex fertilizers like di-ammonium phosphate (DAP) and three grades of Nitrogen, Phosphorus, Potassium (NPK) fertilizers. The fertilizers manufactured by Paradeep Phosphates are currently marketed under the brands of “Navratna” and the Jai Kisaan Navratna”. 

The current year has been a solid year for the IPOs and looks all set to better the tally of 2017. Also, there are mega issues like Policybazaar, Nykaa, Paytm and LIC that are slated to hit the IPO market during the current fiscal.

Also Read:-

1. List of Upcoming IPOs in 2021

2. Upcoming IPOs to raise Rs.45,000 Crore in Oct-Nov