11.75% SREI Infra Finance Secured NCD-Sep/Oct-2014

SREI Infra Finance NCD-Sep,Oct-2014SREI Infra Finance Secured NCD-Sep/Oct-2014-Should you invest?

After 5 months, SREI Infrastructure finance again comes back with secured NCD’s with 11.75% interest rates. Earlier NCD’s have come for medium term period of 3 to 5 years. However, this time, it has come with short term of 2 years to medium term of 5 years. Can we invest in SREI Infra Finance Secured NCD of Sep/Oct-2014, what are its features and the risks involved in SREI NCD? What has changed in company performance compared to our earlier review? About SREI Infrastructure Finance Ltd

SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business. SREI Infra Finance Secured NCD, Sep/Oct-2014

SREI Infrastructure Finance is issuing 2 years, 3 years and 5 years secured NCD’s. For secured NCD, the assets are backed up for principal and interest. In case unforeseen thing happening to the company, investors of NCD would still get their principal investment and interest. Also Read: How Post Office MIS Scheme would help you to get monthly income? Features of SREI Infra Finance Secured NCD, Sep/Oct-2014

  • Start Date: 29-Sep-2014
  • End date: 31-Oct-2014
  • NCD’s are available in 2 years, 3 years and 5 year tenure.
  • Interest rates are up to 11.75% per annum depending on the series chosen by you.
  • There would be 0.25% extra interest paid to existing customers and existing shareholders.
  • Interest payable monthly, annually or at maturity depending on the series of NCD.
  • Face value of the 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 only. Hence, these are liquid investments.
  • Non-resident Indians (NRI’s) cannot invest in these NCD’s.
  • The issue size is Rs 250 Million with an option to retain Rs 1,250 Million aggregating to Rs 1500 Million.
  • NCD ratings are CARE AA- (double A minus) by CARE and BWR AA by Brickworks credit agency.

Below is the Interest rate chart

SREI Infra NCD-Sep,Oct-2014-Interest chart-U

 SREI Infra Finance Secured NCD, Sep/Oct-2014 – How the returns taxed?

  • There would not be any TDS deduction on the interest portion if you have applied through demat account.
  • Income tax on interest would be based on individual tax slab. Means, irrespective of whether company deducts TDS or not, you should show the interest income on your income tax return and pay necessary income tax.

How the company is doing in terms of Financials?

  • The total consolidated income of the company has grown from Rs 3,110 Crores (FY 2012-13) to Rs 3,260 Crores (FY 2013-14) indicating a growth of 5%.
  • Profits have reduced from Rs 260 Crores (FY 2012-13) to Rs 137.7 Crores (FY 2013-14) indicating a negative growth of 47%.
  • Non Performing Assets (NPA) of the company is 1.58% (FY2011-12) Vs 2.77% (FY 2012-13) vs 3.53% (FY 2013-14).

Why to invest?

  • Company is doing good in terms of revenues.
  • These are secured NCD’s. Means in case of any unforeseen thing happening to companies, investors of NCD would still get the principal and interest. Hence it is safe to invest in such secured NCD’s.
  • Attractive annualized yield of 11.75%.
  • No TDS if you invest in demat form.

Why not to invest?

  • Infrastructure finance companies are little risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
  • Due to the high cost of funding, CARE has downgraded its rating to CARE AA- (minus) during Nov-2012.
  • There is a profitability dip in the last financial year 2013-14 compared to previous years. The decline in profits is negative indication about the company. One should be cautious regarding this.
  • Increase in Non Performing Assets (NPA) to 3.5% is a concern.

Also Read: How REITs would turn as best investments in India? How to apply?

Majority of the stock brokers who offer demat accounts are offering even the service of FD’s subscription too. You can directly apply through ICICI Securities or Karvy securities. However, you need to have a demat account for this. Download SREI presentation from their site on these NCD’s Conclusion: SREI Infra Finance Secured NCD, Sep/Oct-2014 are secured. However, there is a dip in the profits of the company which is considered as major risk. Since these are traded on BSE, you can exit if required. If you want to park your money for 2 to 5 years time frame and consider taking risk, you can invest in SREI Infra Finance NCD of Sep/Oct 2014 and get good returns. If you enjoyed this article, share this with your friends and colleagues through Facebook and Twitter. Suresh SREI Infra Finance Secured NCD Sep/Oct-2014




    Can anyone let me know which month the anual intrest is being paid? I am unable to find any entry in my bank.



  • Venkatesh

    Hi Suresh,

    Appericiate your effort.

    I am planning to invest 1 Lakhs in 3 years, Please let us know what will be y return amoun and let us know how to calculate. I am new in investment.


    • Venkatesh, The computations are already given. You can choose cumulative option where you would get 11.5% interest rate per annum and you would get Rs 1,387 for every thousand invested. 

  • Maven

    Good morning sir
    Was just reading about RBI Rajan keeps Rates unchanged. Is it Good or Bad for saving account holders?

  • Singh

    Hi Suresh,

    As per SREI prospectus the interest rates are different then what you have mentioned for eg: 3 year monthly rate for retail investor is 10.95% + 0.25 additional for current bond and share holder makes it 11.20%.Similarly for 5 year monthly option it’s 10.95% +0.25 for current bond and share holders makes it 11.42% per annum.

  • Alok

    Hi Suresh,

    as mention “If unforeseen happen to company, we will get our invested amount and interest” but my question is how, if the company lost all, from where company will get money to pay us our interest and principal.


    • Hi Alok, Here when a company wind-up for some reason, money left over would be first distributed to secured loans / secured NCD’s. Then balance would be paid to creditors / shareholders. If company has lost every thing (which would not happen in general), there is nothing and nothing is paid to every one.

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