Manappuram Finance Secured NCD-Sep / Oct-2014
Manappuram Finance Limited has earlier issued NCD’s in Jan-2014 and in Mar-2014. It is issuing secured NCD’s for one more time (secured non-convertible debentures) now in Sep and Oct-2014. Even this time, it comes with 11 different options where the tenure is for 400 days to 75 months. These bonds would double your money in 75 months (Previous NCD’s, it issued 70 months NCD which doubled your money). The annualized yield is as high as 12.13% 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.
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.
Also Read: What are the risks of investing in corporate Bonds / NCD’s?
Manappuram Finance NCD of Sep/Oct-2014
Manappuram Finance is issuing NCD’s in 11 options and all these are secured in nature.
Features of Manappuram Finance NCD of Sep/Oct-2014
- Issue start date: 15-Sep-2014
- Issue end date: 8-Oct-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 150 Crores with an option to retain over subscription for another Rs 150 Crores
- These NCD ratings are Crisil A+/Stable by CRISIL which indicate adequate safety. Please note that Jan-2014 NCD’s were rated as A+/Negative by CRISIL.
- Manappuram Finance NCD-Sep/Oct-2014-Prospectus can be downloaded from this SEBI link.
Below are the Interest rates details.
How is the company is doing in terms of profits?
Its profits are as below:
- 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
- Year ended Mar-2014 – Rs 226.11 Crores
Non Performing Assets (NPA) of the company are 0.67% (FY2011-12), 1.21% (FY 2012-13) and 1.22% (FY 2013-14).
Why to invest?
- Company is earning good profits in the last 5 years. However, its profits declined in the last 2 years. One of the financial websites compared FY2011-12 profit with FY 2013-14 profit and indicated that profits have declined heavily by 60%. In FY 2011-12, revenues were also high. This gives one side of the picture to investors or readers. Good comparison could have been with numbers in last 5 years and any abnormal, could have been highlighted. However the fact remains, that profits are in declining mode, but seen some improvement in FY 13-14 compared to previous 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 11.00% to 11.50% per annum
- You can double your money in 75 months (6 Years and 3 months)
- Improvement in Crisil rating from A+/Negative to A+/Stable
Also Read: How to invest in top rated corporate fixed deposit schemes?
Why not to invest?
- Loans on gold ornaments are riskier. Decline in gold prices (bear trend which we are seeing now), can pose high risk to such business.
- No reduction seen in NPA’s for the year ending Mar-2014 compared to the previous financial year.
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 considering the negative factors. I feel this is for high risk, high return individuals. Alternatively, if you are a high risk individual, there are various new IPO’s are coming now, you can hold some money for them to get good returns in the short term.
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Manappuram Finance NCD – Sep/Oct-2014
Hi, Suresh – Can you please elaborate why not to invest on MFs. Everyone else advise to go for SIP on MF as they expect equity market to go up in the next 5 years.
You are asking me a difficult question. Why not to invest in MF is very unique question which you have asked me. Want to know why you would like to know that ?
Is the NCD return taxable?
Say i invest a lakh for full tenure (6 yrs 5 months), will there be an taxable component?
Abdul, Returns from NCD’s are taxed like any other fixed income instrument. You may declare the same every year and pay necessary income tax as per income tax slab
I have 5 lakhs which i want to invest for my daughters future with 20 yr tenure. Given the price of gold has dropped, i thought of buying gold for 2.5 laks and invest the balance 2.5 laks in MF or NCD. Can you suggest a good proposal?
Gold prices are expected to fall further. Instead of investing 50%, you can invest 20% to 30% and in case of further call you can invest 20% more. I may be wrong too. Also you can invest balance in short term funds and do STP to large cap funds. Investing in secured funds should also be ok, but reduce your exposure to corporate FD’s and NCD’s.
Hi Mr. Suresh, can you please describe basics of IPO investing, advantages and disadvantages and cautions? It would really help beginner investors like me who wish to invest for a short time benefits.
Ajit, I would write an article by next week on this
Hi Suresh sir. Nice article. Sir, I want to invest for 3 year time horizon. Which is good option for me? My age is 25 year. I can take moderate risk. I am already investing in bank fd, ppf. Also, HDFC TOP 200, HDFC Prudence, Reliance equity opp., Reliance small cap fund.
Sanket, 3 years, don’t invest in mutual funds as you may not get good returns. Sometimes it could be lower than bank FD interest. If you still want to proceed with balanced funds
Ok Sir. I am investing in mf for 8 to 10 year time horizon. But I want to invest money for 3 year time horizon also. Which is best option for me for investing 3 year time horizon? I can take moderate risk.
Sanket, Investing in MF for 3 years is risky. But if you still want to proceed you can look for balanced funds. Other than MF, you can look for secured NCD’s for short term.
Yes your correct this ncd high risk means we can take that high risk in ipo so that we willeget more returns compared to this ncd