Indiabulls Housing Finance Right Issue 2024

Indiabulls Housing Finance has announced a Rs 3,700 crore rights issue. The subscription for the rights issue will open on February 7, 2024, and close on February 13, 2024. The company will issue 24.62 crore equity shares with a face value of Rs 2 per share at Rs 150 per equity.

Let’s begin by understanding: ‘What is a rights issue?’

What is a rights issue?

The rights issue is an offer to the existing shareholders to buy additional shares. Cash-strapped companies can release rights shares when they need to raise additional funding. The offer gives the right to the shareholders but not the obligation to buy new shares of the company at a discounted price.

The rights offer gives shareholders securities called rights. With the rights, the shareholders can buy new shares at a lower rate than the current market price on a fixed future date. Individuals can increase their exposure to the company by committing to the rights issues.

Before subscribing to the rights issue, investors should know a few things, like the rights issue ratio. Rights issues are shared on a pro-rata basis at a fixed rate. Indiabulls Housing Finance rights issues will be available at a ratio of one equity share for every two fully paid-up equity shares held by an eligible equity shareholder of the company as of the record date.

Indiabulls Housing Finance company overview

Indiabulls Housing Finance Ltd is one of the larger housing finance companies (HFCs) in India. In its current legal form, its origins date back to April 1, 2012, when Indiabulls Financial Services Ltd was reverse merged with it. The company is registered with and regulated by the National Housing Bank (NHB) and is engaged in the business of providing home loans and loans against property. It also provides corporate mortgage loans – lease rental discounting and residential construction finance

After the merger, Indiabulls Housing Finance continues to operate as an HFC registered with the National Housing Bank. The company, along with its subsidiary Indiabulls Commercial Credit Ltd, focuses on asset classes such as mortgages and commercial real estate. The company has initiated a rebranding exercise to simplify its corporate structure and signify the focus towards retail mortgage lending.

Objectives of the rights issue

The company intends to utilize the net proceeds from the issue towards augmenting the capital base of the company and general corporate purposes.

Eligibility for the rights issue

To participate in the rights issue, the shareholder must own the company’s share as of the record date. The shares become ex-rights one day before the record date. If you buy shares on or after the ex-date, you can’t apply for the rights shares. It is because it takes t+2 days to deliver the equities to the investors’ Demat, and you’ll not qualify as an existing shareholder on the record date.

Terms of payment 

Initially, shareholders will have to pay Rs 50 per Rights Equity Share at the time of application and the remaining amount on subsequent calls.

Important dates of Indiabulls Housing Finance rights issue

How to apply for Indiabulls Housing Finance rights issue

Here is a step-by-step guide to applying for the rights issue.

You can apply for Indiabulls Housing Finance Rights Issue 2024 in two ways:

1. Net Banking (ASBA)
2. Registrar’s Website (R-WAP Facility)

Steps to apply using Net Banking (ASBA)

1. Log in to the net banking account of your bank.
2. Go to the ‘IPO & Rights Issue’ section.
3. Check if the Indiabulls Housing Finance Rights Issue 2024 available on the list.
4. Click the Apply button next to the Indiabulls Housing Finance Rights Issue 2024.
5. Fill and check your information.
6. Submit the application.

Note: Your bank may not offer this facility for certain rights issues. In that case, you may have to choose the option below.

Steps to apply using the Registrar’s website (R-WAP)

1. Visit registrar’s website
2. Go to the ‘Rights Issue’ section
3. Select Indiabulls Housing Finance Rights Issue 2024 from the dropdown.
4. Enter Demat Account Number.
5. Fill the online application form.
6. Validate and submit the application.

This RI is jointly led and managed by Nuvama Wealth Management Ltd., and InCred Capital Wealth Portfolio Managers Pvt. Ltd., while KFIn Technologies Ltd. is the registrar of the issue.

Should you subscribe?

Whether or not to subscribe to the rights share is a personal investment decision. If you don’t want to buy the rights shares, you can let your rights expire. But it is not usually recommended. If you ignore the offer, your shareholding will be diluted due to the extra shares issued by the company.

Indiabulls Housing Finance has been struggling with rising debt ever since 2013 but it is evident that the company has undertaken multiple steps to reduce its debt burden and is successful in doing so. The company is slowly reducing its debt back and maintaining its margins. In FY18 the borrowings were at Rs 1,11,056 crore which was reduced to Rs 48,421 crore in H1FY23.

Final words 

As of February 6, 2024, Indiabulls Housing Finance share Price at the BSE stock exchange is Rs 188, meaning the rights issues will be available at a discounted price. The company will use the fund towards Augmenting the capital base of the company and General corporate purposes. The stock is up 6% since the announcement of the right issue details.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.