12.61% Manappuram Finance Secured NCD Mar-2014

Manappuram Finance NCD-Mar-2014Manappuram Finance Secured NCD Mar-2014-You can invest

Manappuram Finance has earlier issued NCD in Jan-2014. It is issuing secured NCD’s for one more time (secured non-convertible debentures). Even this time, it comes with 11 different options where the tenure is for 400 days to 70 months. These bonds would double your money in 70 months (less than 6 years). The annualized yield is as high as 12.61% per annum. I have already indicated my views in my previous article about company performance, positive and negative factors, but let me repeat some of the important points related to these NCD’s.

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About Manappuram Finance Limited

Manappuram Finance is a leading gold loan company / non banking financial company (NBFC) which is engaged in providing gold loans against house hold gold ornaments. This company is listed in BSE and NSE.

Manappuram Finance NCD of Mar-2014

Manappuram Finance is issuing NCD’s in 11 options and all these are secured in nature.

Features of Manappuram Finance NCD of Mar-2014

  • Issue start date: 5-Mar-2014
  • Issue end date: 25-Mar-2014
  • NCD’s are available in 11 options.
  • Interest payable monthly, annually and at maturity depending on the option of NCD.
  • Face value of the NCD bond is Rs 1,000.
  • Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
  • These NCD bonds would be listed on BSE. Hence, these are liquid investments.
  • Non-Resident Indians (NRI’s) cannot invest in these bonds.
  • The issue size is Rs 100 Crores with an option to retain over subscription for another Rs 100 Crores
  • These NCD ratings are A+ by ICRA. Please note that Jan-2014 NCD’s were rated as A+/Negative by CRISIL
  • Manappuram Finance NCD-Mar-2014-Prospectus can be downloaded at this link

Below are the Interest rates details.

Series Tenure (Months) Face Value (Rs) Interest payment Coupon Rate (Interest) Individuals Effective yield per annum Maturity Value
I 400 days 1,000 Cumulative NA 11.00% 1,122
II 24 1,000 Monthly 11.50% 12.13% 1,000
III 24 1,000 Annually 12.00% 12.00% 1,000
IV 24 1,000 Cumulative NA 12.00% 1,254
V 36 1,000 Monthly 12.25% 12.94% 1,000
VI 36 1,000 Annually 12.50% 12.50% 1,000
VII 36 1,000 Cumulative NA 12.50% 1,424
VIII 60 1,000 Monthly 11.50% 12.13% 1,000
IX 60 1,000 Annually 12.00% 12.00% 1,000
X 60 1,000 Cumulative NA 12.00% 1,762
XI 70 1,000 Cumulative NA 12.61% 2,000

How is the company is doing in terms of profits?

1) Its profits are as below:

  • Year ended Mar-2009 – Rs 30.30 Crores
  • Year ended Mar-2010 – Rs 119.72 Crores
  • Year ended Mar-2011 – Rs 282.66 Crores
  • Year ended Mar-2012 – Rs 591.46 Crores
  • Year ended Mar-2013 – Rs 208.43 Crores

2) Non Performing Assets (NPA) of the company are 0.67% (FY2011-12) Vs 1.21% (FY 2012-13). Last 6 months ended Sep-2013 indicates at 1.06%.

Positive factors to invest

  • Company is earning good profits in the last 5 years. However, its profits declined in the last 2 years.
  • It offers secure NCD’s where your money is safe. Means in case of any unforeseen thing happening to companies, investors of NCD would still receive the principal and interest. Hence it is safe to invest in such secured NCD’s.
  • Attractive interest rates between 11.50% to 12.25% per annum
  • You can double your money in 70 months (less than 6 years)

Negative factors

  • Capital adequacy ratio as per RBI limit should be 15% and actual as on 31-Mar-2013 is 22.67% which is the outside RBI limit.
  • Loans on gold ornaments are riskier. Decline in gold prices (which happened a few months back), can pose high risk to such business.
  • Increase in NPA’s for the year ending Mar-2013 is a major concern.

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How to apply?

You can apply through your broker where you have a demat account. Alternatively, you can download application from Manappuram website and do it through a manual process.

Conclusion: Manappuram secured NCD’s offer good interest rates. Since these are secured in nature, even in case of bad performance by the company, your payment may get delayed, but you would get your money back. You can lock some of your money in such high interest rate options.

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Manappuram Finance NCD – Mar-2014


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