12.61% Manappuram Finance Secured NCD Dec-13/Jan-14
Updated: Latest Manappuram Mar-2014 NCD analysis is here. After Muthoot Finance NCD’s, another gold loan company Manappuram Finance is issuing secured non-convertible debentures (NCD). It comes with 11 different options where the tenure is for 400 days to 70 months. These NCD’s can double your money in just 70 months (less than 6 years). The annualized yield is as high as 12.61% per annum. Can we invest in Mannapuram Finance NCD? What are its features and what risks are involved if we invest in Manappuram Finance NCD of Dec-2013 / Jan-2014 issue.
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
Manappuram Finance is issuing 11 options of NCD’s which are secured in nature. For secured NCD the assets are backed up for principal and interest. In case of wind-up of the company, investors of NCD would still get their principal investment and interest.
Features of Manappuram Finance NCD
- Issue start date: 30-Dec-2013
- Issue end date: 20-Jan-2014. However it would be closed if the required subscription is received earlier than this.
- NCD’s are available in 11 different 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 stock exchanges. Hence these are liquid investments.
- Non-Resident Indians (NRI’s) can invest in these NCD’s in Options V to Options XI in demat form only. They can apply on repatriation and non-repatriation basis.
- The issue size is Rs 100 Crores with an option to retain over subscription for another Rs 100 Crores
- NCD ratings are A+/Negative by CRISIL.
- Manappuram Finance NCD Prospectus
Below are the Interest rates details.
|Series||Tenure (Months)||Face Value (Rs)||Interest payment||Coupon Rate (Interest) Individuals||Effective yield per annum||Maturity Value|
How is the company is doing in terms of profits?
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
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%.
Why 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 wind-up of the company due to non performance, investors of NCD would still receive the principal and interest. Hence it is safe to invest in such secured NCD’s.
- Attractive interest rates where annualised yield comes between 11.00% to 12.61% per annum
- You can double your money in 70 months (less than 6 years)
Why not to invest?
- 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.
How to apply?
The majority of the stock brokers who maintains demat accounts are offering the service. You can also directly apply through ICICI Direct or any other institutions indicated in the application form, if you would like to go for physical forms. However you need to have these NCD's in demat form to sell them.
Conclusion: Since these Manappuram NCD’s are secured and provides high rate of interest, you can consider this as one of the best investments. However you should consider the risks involved in investing companies. Though your investment and interest are secured, in case of non performance of the company, your payment may get delayed.
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Manappuram Finance NCD December 2013 / January, 2014
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