Unifinz Capital (lendingplate) - 13% Secured NCD at BBB-, 15.5% Secondary Yield for 15 Months

Bond Opportunities
1

Unifinz Capital India Limited is offering 13% senior secured NCDs with a 15-month tenor, rated IND BBB-/Stable by India Ratings. The paper is now available on BondScanner at a yield of approximately 15.5% (ISIN: INE926R07019). This is one of the highest-yielding listed secured instruments on any bond platform right now, and the risk-return profile is unlike anything else we’ve discussed on this forum.

Let me lay out the full picture because the numbers tell a genuinely interesting story.

The company: Unifinz Capital India Limited (BSE-listed) operates as a digital NBFC under the brand “lendingplate.” They do unsecured personal loans to salaried individuals, ticket sizes of ₹5,000 to ₹2.5 lakhs, across 9,000+ pin codes. Loan tenure ranges from 20 days for their short-term personal loan (STPL) product to 12 months for the EMI product. Disbursement within 30 minutes through the app.

Here’s where it gets unusual. The company was incorporated in 1982 as Shree Worstex Limited. Renamed to Unifinz Capital in December 2022. Retail lending operations started only in March 2022. So you’re looking at roughly 4 years of actual lending history. Before that, the entity was doing something entirely different. The pivot was led by Kaushik Chatterjee (CEO and Founder of lendingplate), who has 25 years across ICICI Bank, Indiabulls, IIFL, and Fullerton India.

NCD specifics from the term sheet:

  • Issuer: Unifinz Capital India Limited

  • Coupon: 13% p.a. (fixed), monthly payment

  • Tenor: 15 months (allotment February 24, 2026, maturity May 24, 2027)

  • Face value: ₹10,000 per debenture

  • Nature: Senior, secured, listed on BSE WDM

  • Issue size: ₹75 crore (base ₹20 crore + ₹55 crore green shoe), part of a ₹450 crore shareholder-approved framework

  • Rating: IND BBB-/Stable (India Ratings, assigned December 2025, reaffirmed February 2026)

  • Security: First ranking exclusive charge over identified book debts/loan receivables (1.3x security cover required at all times)

  • Personal guarantee: Kaushik Chatterjee (CEO and Founder)

  • Step-up: 4% per notch downgrade (so if rating drops to BB+, coupon becomes 17%)

  • Day count: Actual/Actual

  • Debenture trustee: Vardhaman Trusteeship

  • No put or call options.

Now the financials, and this is where it gets interesting:

The growth trajectory is explosive. AUM went from ₹392.7 million in FY24 to ₹928.1 million in FY25 to ₹3,078 million by end of September 2025 (Q2 FY26). That’s 3.3x growth in AUM in just one year. Total disbursements in H1 FY26 alone were ₹10,591 million, which is already more than double the entire FY25 disbursement of ₹5,125 million.

Profitability has turned around dramatically. PAT went from a loss of ₹11.38 million in FY24 to a profit of ₹200 million in FY25, and then ₹408.6 million in just H1 FY26. Annualised, that’s nearly ₹800+ million PAT run-rate from a company with ₹1,184 million net worth. The PAT-to-disbursement ratio has stabilised at 3.9%.

The yield on the loan portfolio is eye-popping: 164.4% annualised as of H1 FY26. The STPL product (73% of the book) charges 164% ROI with tenure of 20-50 days, while the EMI product (27%) charges 65% for 2-12 months. These rates have actually come down from 284% and 87% respectively a year ago.

Operating leverage is kicking in. Opex-to-disbursement has dropped from 21.9% (FY24) to 11.6% (FY25) to 6.8% (H1 FY26). Fee income is about 6.5% of disbursement, roughly matching customer acquisition cost of 6%.

Capital position: Net worth rose from ₹36.9 million (FY24) to ₹775 million (FY25, after raising ₹543 million through preferential warrants) to ₹1,183.7 million (H1 FY26, driven by internal accruals). Debt-to-equity is 1.13x. Tier 1 capital at 26%. The company did a 4:1 bonus share issue in December 2025, taking paid-up capital from ₹8.85 crore to ₹44.26 crore.

Here’s the part that matters most for bondholders. Asset quality.

Gross Stage 3 assets (post write-offs) were 1.4% as of September 2025. Sounds great, but context matters. The company writes off STPL loans at 90 DPD (fully provided) and EMI loans at 180 DPD. So the reported 90+ DPD number is artificially low because bad loans get written off the moment they cross 90 days.

The more telling metric: the softer bucket delinquency (1-89 DPD) was 21.1% as of September 2025. That’s one in five loans with at least some payment overdue. It’s improved from 45.5% in FY24, but 21.1% is still elevated by any standard.

The adjusted 90+ DPD including 12-month write-offs as a percentage of 12-month disbursements was 4% in September 2025, down from 5.9% in March 2025. Credit cost to disbursement was 6.9% in H1 FY26. Collection efficiency improved to 92.5% YTD FY26 from 70.6% in FY25.

Borrower profile: bureau scores ranging mainly from 500-700, minimum monthly income ₹17,000 (semi-urban) to ₹20,000 (urban). 76% of disbursements go to repeat customers, but these are fresh sanctions, not top-ups.

Funding: Total borrowings of ₹1,339 million as of September 2025. 70.8% from NBFC term loans, 29.2% from inter-corporate deposits (ICDs) from existing shareholders. Weighted average cost of funds around 21% including processing fees. Lending relationships increased from 3 (FY25) to 14 (H1 FY26), but two lenders still account for 50% of sanctions.

Financial covenants in the NCD documentation are tight:

  • Capital adequacy ratio above 22%

  • GNPA below 5% of gross loan portfolio

  • PAR>90 below 15% of tangible net worth

  • GNPA/GLP below 2%, NNPA/GLP below 2%

  • Debt-to-equity below 3x on-book, below 4x including off-book

So the core question: is 15.5% yield for 15 months adequate compensation for the risks in this credit? The NCD is secured (1.3x cover on loan receivables), has a personal guarantee from the CEO, has a 4% step-up per downgrade, and tight financial covenants. But it’s also BBB- (one notch above speculative), from a company with 4 years of lending history, lending unsecured to borrowers with 500-700 bureau scores at 164% annualized rates.

Interested to hear what others think.

Disc: Not invested yet. Studying this carefully.

2

Let me start with what I think everyone’s going to miss about this credit if they just look at the BBB- rating and move on.

The economics of this business are completely different from a traditional NBFC. When Ind-Ra says the yield on loans is 164%, they’re not talking about a loan shark operation (although the optics are uncomfortable). They’re describing a micro-duration lending model where the average loan is outstanding for 20-50 days. A ₹10,000 loan at 164% annualised for 35 days works out to roughly ₹1,575 in interest. The borrower pays ₹11,575 and the loan is off the books. The portfolio churns 3.4 times against AUM in a single half-year.

This high churn is what makes the economics work. Yes, credit costs are elevated at 6.9% of disbursement. Yes, the softer bucket delinquency is 21.1%. But the spread between yield (164%) and cost of funds (21%) is so massive that the business can absorb credit losses and still generate 3.9% PAT on disbursement. For context, most traditional NBFCs operate on spreads of 3-5%. Unifinz is operating on a spread of 140%+. The risk-return trade-off within the loan portfolio is fundamentally different from what we’re used to analysing.

The question is whether this model is sustainable at scale, and whether it works when the cycle turns. Collection efficiency of 92.5% in a relatively benign environment means 7.5% of flows are late or missing in any given period. In a downturn, that could easily go to 85-88%, at which point the credit costs spike and the profitability buffer gets tested.

The other thing worth noting: the borrowing concentration is a real vulnerability. Two lenders accounting for 50% of sanctions, and 70.8% of funding from NBFC term loans. If one of those NBFC lenders gets cold feet (maybe they face their own regulatory action or decide to pull back from digital lending partnerships), Unifinz has a liquidity problem very quickly. The ₹1,135 million in unutilised bank lines provides some buffer, but this is the kind of funding structure that can unravel fast.

For the NCD specifically though, I’d highlight something people might overlook: the security structure. This isn’t just “secured against assets of the company” in a vague sense. It’s a first ranking exclusive charge over identified book debts at 1.3x cover, with a mandatory replacement mechanism (any loan overdue more than 15 days must be swapped out with a current loan within 15 business days). Plus a personal guarantee from the CEO. For a BBB- paper, that’s a meaningful level of structural protection. You’re effectively buying into a continuously refreshing pool of short-duration receivables, not a static collateral that can depreciate.

3

I want to push on the “Shree Worstex to Unifinz Capital” point because it’s the kind of thing that sets off alarm bells for experienced investors and it deserves a proper answer.

The company was incorporated in 1982 as Shree Worstex Limited. For decades it was in the textile/wool business or some variation of it. By the time Kaushik Chatterjee and his team came in, the company had effectively pivoted its entire business model. The name change happened in December 2022, and retail lending operations started in March 2022.

Now, is this a red flag? In isolation, a 40-year-old shell company being repurposed for a completely different business raises legitimate corporate governance questions. But context matters. The company is BSE-listed, RBI-registered as an NBFC-ICC, has gone through a full India Ratings credit assessment, and has ₹1,184 million in net worth built through a combination of equity infusion (₹543 million warrants in FY25) and genuine internal accruals (₹408 million PAT in H1 FY26 alone). The maiden rating from India Ratings in December 2025, reaffirmed in February 2026, means the rating agency reviewed the entire corporate history as part of their process.

I’d also note that using existing listed shells for new businesses isn’t uncommon in India. Lots of legitimate companies have done this. The question is always about the quality of the new promoter/management team and whether the financials stand up to scrutiny. In this case, the explosive growth in AUM (₹393 million to ₹3,078 million in 18 months), the turnaround from loss to ₹408 million PAT in H1, and the fact that India Ratings assigned investment grade on their first assessment suggests the business fundamentals are real, not manufactured.

That said, I’d want to see more seasoning before getting fully comfortable. Four years of lending data, with only the last two showing meaningful scale, isn’t enough to say this book has been tested through a cycle. Every micro-lending NBFC looks brilliant in an upcycle. The test is what happens when the economy slows and the ₹17,000/month salaried guy can’t make that ₹11,575 repayment.

4

A few practical points for anyone considering this.

First, the regulatory risk around digital lending is not hypothetical. RBI has been steadily tightening the framework since 2023. Guidelines on KYC, risk-based pricing, borrower disclosures, key fact statements, and APR disclosure are all evolving. India Ratings explicitly flags this as a key monitorable. The concern isn’t that Unifinz is doing anything wrong today. The concern is that the regulatory environment for digital micro-lenders could change in ways that compress margins or restrict business practices. When your yield on loans is 164% and the borrower’s bureau score is 500-700, you’re operating in a space that attracts regulatory scrutiny. If RBI decides to cap APRs for digital lenders (similar to what they did with microfinance pricing), the entire business model needs to be re-underwritten.

Second, the promoter situation needs flagging. Pawan Kumar Mittal (promoter) resigned as director in October 2025 citing personal reasons. The promoter group is Pawan Kumar Mittal and Kiran Mittal. But the personal guarantee on the NCD is from Kaushik Chatterjee, who is the CEO/Founder of lendingplate but not listed as part of the promoter group in the term sheet. So you have a situation where the promoters are the Mittals but the operational driver and guarantor is Chatterjee. That’s a slightly unusual governance structure. The value of the personal guarantee depends on Chatterjee’s personal net worth, which isn’t disclosed in the documents.

Third, the 15.5% yield on BondScanner. The paper was issued at par (₹10,000) but is available at ₹9,865.52, which means it’s trading at a slight discount in secondary. That 15.5% yield includes both the 13% coupon and the capital appreciation from buying below par. For a 15-month tenor, the all-in return of ~₹1,751 per ₹9,866 invested is genuinely attractive if you believe the credit will hold.

Fourth, on liquidity. This is listed on BSE Wholesale Debt Market. Minimum subscription was ₹1 crore in the primary placement. The fact that it’s now available on BondScanner at lower ticket sizes means some of the original subscribers are distributing. Secondary market liquidity for BBB- WDM paper is going to be thin. If you buy this, assume you’re holding to maturity. Don’t count on being able to exit at a reasonable price before May 2027.

5

I want to dig into the collection efficiency and credit cost numbers because they’re the key to whether this credit holds up.

Collection efficiency went from 70.6% in FY25 to 92.5% YTD FY26. That’s a massive improvement, and it tells you one of two things: either the company has dramatically improved its collection infrastructure, or the FY25 number was distorted by the early-stage chaos of building out the book from scratch (remember, meaningful scale only started FY25). Probably a mix of both.

But 92.5% in the context of 20-50 day loans means that in any given cycle, 7.5% of cash flows are delayed or missing. For a traditional NBFC doing 12-36 month loans, 92.5% collection efficiency would be a disaster. For a micro-duration lender doing 35-day loans, the interpretation is different because the absolute rupee amount at risk at any point is small relative to total throughput. The portfolio churns so fast that a delinquent loan quickly becomes a write-off and gets replaced by new disbursements.

The credit cost to disbursement of 6.9% is the number I’d focus on. The company disbursed ₹10,591 million in H1 FY26 and generated ₹408.6 million PAT. If credit costs increase by 2-3 percentage points (say from 6.9% to 9-10% of disbursement during a stress scenario), that’s roughly ₹210-320 million of additional losses on annualised disbursement of ₹21,000 million. Against a net worth of ₹1,184 million and a PAT run-rate of ₹800+ million, the company can absorb a meaningful spike in credit costs without threatening the NCD repayment. But if credit costs go to 12-15% (which happened during COVID for some digital lenders), the profitability buffer gets thin quickly.

The one thing that really stands out to me: 21.1% of the portfolio is 1-89 DPD. One in five loans has at least some payment past due at any given time. That’s the nature of the borrower segment (500-700 bureau scores, ₹17-20K monthly income), and the business model is designed to handle it. But it means you’re always one bad quarter away from a significant NPA spike if the economic environment turns.

For the NCD specifically, the 1.3x security cover on a portfolio with 3.4x churn provides reasonable comfort for a 15-month hold. The receivables get replaced continuously, and the requirement to swap out overdue loans within 15 business days means the collateral pool stays relatively clean. It’s a fundamentally different security structure from a mortgage or LAP-backed NCD where the collateral is static.

6

Good discussion. Let me summarise where I think the risk-reward sits.

The bull case: You’re getting 15.5% yield for 15 months on a senior secured NCD with 1.3x cover, personal guarantee, and 4% step-up protection. The underlying business has gone from loss-making to ₹408 million PAT in H1 FY26, with net worth of ₹1,184 million supporting ₹1,339 million in borrowings (1.13x D/E). The spread between lending yield (164%) and cost of funds (21%) gives an enormous buffer to absorb credit losses. Short tenor means you’re in and out before any major structural risk materialises. The financial covenants are tight (GNPA <5%, D/E <3x, CAR >22%), and the step-up clause means any rating deterioration automatically increases your coupon.

The bear case: BBB- is one notch above speculative grade. The company has only 4 years of lending history and hasn’t been tested through a credit cycle. Borrowers have bureau scores of 500-700 with 21.1% of the portfolio in softer delinquency. Collection efficiency of 92.5% sounds good but is actually stressed for the broader market. Funding is concentrated (two lenders = 50% of sanctions, cost of funds 21%). Regulatory risk from RBI on digital lending APR caps or operational restrictions could fundamentally change the economics. Promoter-management dynamics (Mittals vs Chatterjee) add governance complexity. Secondary liquidity will be negligible.

My take: For someone who has a dedicated high-yield allocation and understands the risks of sub-investment-grade credit, this is one of the more interesting risk-rewards in the market right now. The structural protections (security, guarantee, step-up, covenants) are unusually strong for a BBB- paper. The 15-month tenor limits your exposure to long-term execution risk. And the 15.5% yield on secondary is pricing in a significant credit risk premium.

I’d size this at 2-3% of a fixed income portfolio, maximum. Not because I think the credit is bad, but because concentration risk in a single BBB- name is how portfolios blow up. If you’re already holding Keertana, Akme, or other high-yield names, make sure this doesn’t push your sub-AA allocation beyond whatever limit you’ve set for yourself.

The key risk I’d monitor: the quarterly collection efficiency and credit cost numbers. If the adjusted 90+ DPD (including write-offs) starts creeping back above 5-6%, or if the NBFC lenders start pulling back funding lines, that’s when this credit comes under pressure. The next quarterly results will be important.

Will update this thread when H2 FY26 numbers are available.

Disc: Not invested. Monitoring for entry.