9.5% SREI Infra Finance NCD Feb 2017 Issue – Should you subscribe?

SREI Infra Finance NCD Feb 2017 Issue

After 4 months, SREI Infrastructure Finance is coming up with Secured NCD’s in Jan/Feb-2017. SREI Infra Finance NCD 2017 would open for subscription on 30^th January, 2017. It offers yield up to 9.5%. It provides 400 days, 3 years and 5 years tenure secured NCD’s. Earlier, from SREI group, SREI Equipment Finance NCD’s were opened which offered yield upto 9.7%. Compared to that this NCD offers 0.2% lower yield. What are the features of SREI Infra Finance NCD? What are the risk factors one should consider before investing in such NCD’s? Who should invest in SREI Infra Finance NCD 2017?

About SREI Infrastructure Finance Ltd

SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business.

Also Read: Bank FD Schemes offering highest Interest Rates in Jan 2017

SREI Infra Finance NCD – Feb 2017

SREI Infrastructure Finance is issuing 400 days, 3 years and 5 years secured NCD’s. For secured NCD, the assets are backed up for principal and interest. In case non performance of the company and company gets wind-up (closed), investors of NCD would still get their principal investment and interest.

Features of SREI Infra Finance NCD – Feb 2017

• Start Date: 30-Jan-2017
• End date: 23-Feb-2017
• NCD’s are available for 400 days, 3 years and 5 year investment period.
• Interest rates are up to 9.5% per annum depending on the series chosen by you.
• The yield would work out upto 9.5%, depending on the series chosen by you.
• Interest payable monthly, annually or at maturity depending on the series of NCD.
• The face value of the bond is ₹ 1,000.
• Minimum investment is for 10 bonds means, you need to invest for a minimum of ₹ 10,000. Beyond this you can invest in multiples of 1 bond.
• These NCD bonds would be listed on BSE and NSE. Hence, these are liquid investments.
• Non-resident Indians (NRI’s) cannot invest in these NCD’s.
• The issue size is ₹ 250 Crores with an option to retain over subscription upto ₹ 706.63 Crores.
• NCD ratings are BWR AA+ (BWR AA Plus) by Brickworks credit agency.

Below is the Interest rate chart for SREI Infra Finance NCD – Feb 2017

SREI Infra Finance NCD – Feb 2017 – How the returns taxed?

• For investors who are applying through demat account, there would not be TDS deduction.
• 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.

Also Read: How to become Crorepati by investing in Mutual Funds?

How the company is doing in terms of Financials?

• The total consolidated income of the company has declined from ₹ 3,360 Crores (FY 2014-15) to ₹ 3,261 Crores (FY 2015-16) indicating a negative growth of 3%.  For 6 months ended Sep-2016, its revenues were at ₹ 2,214 Crores compared to ealier year 6 months ended Sep-2015 of 1,640 Crores indicating 35% increase in revenues.
• Profits have reduced from ₹ 129.11 Crores (FY 2014-15) to ₹ 72.52 Crores (FY 2015-16) indicating a negative growth of 44%. For 6 months ended Sep-2016, its profits are at ₹ 113 Crores compared to last year 6 months ended Sep-2016 of ₹ 35 Crores indicating a jump of 232%.

Why to invest in SREI Infra Finance NCD – Feb 2017?

• While year on year, it showed reduction in revenues in FY16 compared to FY15, its revenues for 6 months ended Sep-21016 indicates positive sign.
• Similarly, its profits has zoomed for 6 months ended Sep-2016 compared to last year. Higher profits indicate strong fundamentals and high capability to repay principal and interest to NCD holders.
• These are secured NCD’s. Means in case of any unforeseen thing happening to this company and it would get windup/closed, 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 9.5%.
• No TDS if you invest in demat form.

Why not to invest in SREI Infra Finance NCD – Feb 2017?

• Infrastructure finance companies are risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
• Increase in Non Performing Assets (NPA) to 3.54% for FY16 is a major concern.

Also Read: Post Office Schemes Offer superior Returns in 2017 compared to Banks

How to apply?

The majority of the stock brokers who maintains demat accounts are offering the service of FD’s subscription too. You can directly apply by login to demat account portal.

Download SREI Infrastructure Finance NCD – Feb 2017 Prospectus here.

Conclusion: SREI Infrastructure Finance NCD of Jan/Feb-2017 are secured. Since these trades on BSE, you can exit if required. If you want to park your money for short term of 400 days or medium term of 3 years and willing to take risk, you can subscribe. Alternatively, you can consider debt mutual funds which can give you similar returns, however not guaranteed.

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Suresh

SREI Infra Finance NCD Feb 2017 Issue

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Suresh KP

Founder at Myinvestmentideas.com

Suresh KP is the founder of MyInvestmentIdeas.com, which he has run since 2011. He has over 23 years of experience across investments, mutual funds, stock markets, insurance, taxation and financial planning, and has written 2,500+ articles for Indian retail investors. He has completed NISM Investment Adviser (Level 1 & 2) and NISM Research Analyst certifications. Articles on this site compare publicly available data for educational purposes; Suresh is not a SEBI-registered investment adviser. More about his background: About Suresh KP | X (Twitter)

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