India Shelter Finance Corporation Limited has allotted 15,000 secured, redeemable non-convertible debentures (NCDs) worth ₹1,500 crores through private placement. This move significantly exceeds the previously announced plans and represents a major financial development for the company.

Key Details of the NCD Allotment

Significance of the Issue

This NCD allotment represents a significant financial move for India Shelter Finance Corporation. By raising ₹1,500.00 crores through this private placement, the company has substantially increased its financial resources compared to the initially planned ₹200.00 crores. The quarterly interest payments and the 60-month tenure provide a structured approach to managing this debt instrument.

Investor Considerations

For investors, these NCDs offer a fixed interest rate of 7.85% per annum, payable quarterly. The security backing of the NCDs, with a minimum asset cover of 1.10 times on standard receivables, adds a layer of assurance for the debenture holders.

Regulatory Compliance

The company's disclosure of this allotment aligns with its commitment to transparency and adherence to regulatory requirements, including Regulations 30 and 51 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

This substantial NCD allotment underscores India Shelter Finance's ability to attract significant capital and may indicate strong investor confidence in the company's financial prospects and management.

India Shelter Finance Corporation, a prominent player in the affordable housing finance sector, has reported robust growth in its Assets Under Management (AUM) for Q2, despite facing industry-wide challenges. The company's strategic focus on Tier-2 and Tier-3 cities, coupled with its emphasis on self-employed customers in the affordable housing segment, has contributed to its strong performance.

Key Financial Highlights

• AUM Growth: The company's AUM reached Rs. 9,252.00 crores, marking a significant 31% year-on-year growth.
• Disbursements: Q2 saw disbursements of Rs. 931.00 crores, representing a 12% growth.
• Network Expansion: 9 new branches were added, bringing the total to 299 branches.
• Profitability: Net profit increased by 35% year-on-year to Rs. 122.00 crores.
• Return on Equity: Stood at 17%.

Asset Quality and Financial Metrics

India Shelter Finance has maintained stable asset quality metrics, demonstrating resilience in a challenging environment:

Business Outlook and Strategy

The company has reiterated its guidance for the coming periods:

• Loan Growth: Targeting 30-35% growth
• Spreads: Aiming to maintain above 6%
• Credit Costs: Expected to be in the range of 40-50 basis points

Management noted some seasonal challenges in Q2, particularly due to rains and GST implementation delays. However, they expect improved momentum in the second half of the fiscal year.

Focus on Employee Retention

In a significant move to boost employee retention and align staff interests with the company's long-term goals, the Board has approved ESOP schemes for branch managers. This initiative is set to cover approximately 500 employees, potentially reducing attrition rates and enhancing operational stability.

Market Position and Competitive Edge

India Shelter Finance continues to leverage its strong presence in Tier-2 and Tier-3 cities, focusing on self-employed customers in the affordable housing segment. This strategic positioning has allowed the company to tap into a growing market while maintaining asset quality.

Funding and Liquidity

The company's funding profile remains robust:

• Cost of funds decreased by 10 basis points to 8.50%
• Management expects a further 20 basis points reduction by year-end
• Diversified borrowing from over 30 counterparties with an average tenure of about 8 years

Conclusion

India Shelter Finance Corporation's Q2 results demonstrate its ability to grow sustainably while navigating industry challenges. The company's focus on underserved markets, coupled with prudent risk management, positions it well for continued growth in the affordable housing finance sector. However, investors should remain vigilant of potential asset quality pressures and broader economic factors that could impact the sector.

As the company continues to expand its network and enhance its operational efficiencies, it appears well-positioned to capitalize on the growing demand for affordable housing finance in India's smaller cities and towns.