5 Top Rated NCD’s to buy from Secondary Market now

Top Rated NCDs to Buy from Secondary Market nowTop Rated NCD’s to buy from Secondary Market now


There are some requests from readers to recommend top rated NCD, which can be purchased from secondary market (BSE/NSE) to get high returns. I have analyzed NCD’s which are trading in BSE/NSE at cheaper price now and short listed these top rated NCD bonds to invest. These NCD’s would provide good returns and annualised yield is as high as 15.3%, if you hold them till maturity. What are these top rated Non Convertible Debentures (NCD) bonds, which you can buy from secondary market now to get such superior returns? 

Also Read: What are the top rated company Fixed Deposit Schemes to invest in India?

How I short listed these top rated NCD for investment?


My analysis contains the following parameters:

  • I have considered NCD’s which are currently trading in BSE/NSE and their last trading price (LTP). Generally, these have a face value of Rs 1,000 per bond, however, depending on coupon pay out date and demand/supply to buy/sell in the open market, the bond rate fluctuates.
  • Yield to maturity (YTM) of an NCD is the internal rate of return earned by an investor who purchases the NCD bonds today, at the market price, assuming that the bond will be held until maturity, and that all coupons and principal payments will be made on schedule.

E.g. if an NCD, which has a face value of Rs 1,000 is trading at Rs 1,030 which has 12% coupon rate and coupon payout date is on 28-Feb-15, you would get Rs 120 as interest in next 3 months. Ideally the bond should have traded with a face value + 9 months interest, i.e. Rs 1,000 + Interest of Rs 90 (Rs 1,000 x 12% x 9/12). However, it is trading at Rs 1,030. Means you are benefitting Rs 60 per bond. This Rs 60 per bond would work to 6% on face value (Rs 1,000 / 60 x 100). If you need to hold this bond for next 2 years till maturity, you are going to get 3% per year additionally apart from coupon rate of 12%. Means you would be getting 15% per annum interest for next 2 years. This is what I call as, smart way of investing in NCD’s from secondary market.

  • One precaution should be taken while analyzing such bonds is that during the coupon payment period for the NCD i.e. period from record date till coupon payment date, YTM may not provide correct view as it may include coupon (interest) to be received on the coupon payment date which is not receivable if an investor buys a security during the said period. Typically NCDs Bonds have Ex-date 15 working days before the coupon payout date. Hence, any coupon date falling for next 15-30 days should be avoided, instead of getting  confused and investing in wrong investment. I have anyway removed such NCD’s from my analysis.

5 Top Rated NCD’s to buy from Secondary Market now

Top 1: Manappuram Finance Limited – NCD Series: MANAPPURAM FIN S6 12.5 05AP17


  • This is ICRA A+ rated NCD
  • Coupon rate is 12.5% per annum
  • Face value of the NCD bond is Rs 1,000 per bond
  • Currently these NCD bonds are available in the secondary market at Rs 1,025 with coupon payout date of 5th April. Means if you invest from now to 5th April, 2015, you would get 12.5% interest on Rs 1,000 bond price i.e. Rs 125 per bond.
  • Maturity of the NCD is 5-Apr-2017.
  • Yield to Maturity works out to be 15.33% per annum if you are holding till maturity.

Top 2: Shriram City Union Finance Limited – NCD Series: SHRIRAM CITY S1 10.5 3MY16 1K


  • This is CARE AA rated NCD
  • Coupon rate is 10.5% per annum
  • Face value of the NCD bond is Rs 1,000 per bond
  • Currently these NCD bonds are available in the secondary market at Rs 1,001 with coupon payout date of 3rd May. Means if you invest from today to 3rd May, 2015, you would get 10.5% interest on Rs 1,000 bond price i.e. Rs 105 per bond.
  • Maturity of the NCD is 3-May-2016
  • Yield to Maturity works out to be 15.12% per annum if you are holding till maturity.

Top 3: Manappuram Finance Limited – NCD Series: MANAPPURAM FIN S3 12 05AP16


  • This is ICRA A+ rated NCD
  • Coupon rate is 12.0% per annum
  • Face value of the NCD bond is Rs 1,000 per bond
  • Currently these NCD bonds are available in the secondary market at Rs 1,040 with coupon payout date of 5th April. Means if you invest from now to 5th April, 2015, you would get 12.0% interest on Rs 1,000 bond price i.e. Rs 120 per bond.
  • Maturity of the NCD is 5-Apr-2016.
  • Yield to Maturity works out to be 15.0% per annum if you are holding till maturity.

Top 4: Shriram Transport Finance Company Limited – NCD Series: SHRIRAM TRANS OP1 9.75% 01JU15


  • This is CARE AA+ rated NCD
  • Coupon rate is 9.75% per annum
  • Face value of the NCD bond is Rs 1,000 per bond
  • Currently these NCD bonds are available in the secondary market at Rs 1,045 with coupon payout date of 1st April. Means if you invest from now to 1st April, 2015, you would get 9.75% interest on Rs 1,000 bond price i.e. Rs 97.5 per bond.
  • Maturity of the NCD is 1-Jun-2015.
  • Yield to Maturity works out to be 13.59% per annum if you are holding till maturity.

Top 5: Shriram City Union Finance Limited – NCD Series: SHRIRAM CITY SR1 10.6% 06OT15


  • This is CARE AA rated NCD
  • Coupon rate is 10.6% per annum
  • Face value of the NCD bond is Rs 1,000 per bond
  • Currently these NCD bonds are available in the secondary market at Rs 1,051 with coupon payout date of 3rd May. Means if you invest from now to 1st April, 2015, you would get 10.6% interest on Rs 1,000 bond price i.e. Rs 106 per bond.
  • Maturity of the NCD is 6-Oct-2015
  • Yield to Maturity works out to be 12.88% per annum if you are holding till maturity.

Consolidated Top Rated NCD Bonds available in secondary market is indicated below


Top Rated NCDs to Buy from Secondary Market now-Nov-2014

Also Read: PNB Housing Finance FD Scheme offers 15% Interest – Can we invest in this?

What are the risks involved if you buy them from secondary market?

While you purchase them from secondary market, you need to keep few things in mind. 

  • Don't think that you can sell these bonds anytime and come out before maturity. If you want to sell them before maturity, you may need to sell them at lower price as there might not be any demand.
  • Though these are top rated bonds, in case of any under performance of the company in future, it can delay the interest payment and re-payment of investment amount itself.

Conclusion: Investing in company NCD Bonds would contain some risk. If you are high risk takers and looking for good returns, you can invest in these high rated NCD’s.

Readers, I would love you hear from you about this analysis. Do you see any risks in this analysis ?

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Suresh
Top Rated NCD’s to Buy from Secondary Market now

57 comments

  • sushil

    how invest pnb housing finance

  • Ramana

    Thank you for a very useful article. Unfortunately, it seems there are limited facilities available from brokerages when it comes to buying an NCD from the secondary market. For example, if I want to purchase Muthoot finance, I can unable to search for the NCD after putting in the symbol MUTHOOTFIN in a prominent brokerages website. Of the big ones, only ICICI direct seems to provide a separate page for purchasing NCD. Even their, the YTM calculation are incorrect. I checked them by using the rate function in Microsoft Excel. After talking to my friends, I have looked at the following brokerages and none of them provide the yield to maturity information. Reliance, Kotak securities and Religare securities . NSE website also does not provide yield to maturity information. Same is the case of BSE.

    Can you please suggest if there is a way to find the yield to maturity as well as the list of NCD that are being sold on any given day? Since it is a thinly traded market, I have to consistently look for NCD where there is a Seller, then immediately compute the YTM using Microsoft Excel and then again go and compare it with other NCD where there is a Seller.

    Any place other website that provides this information and helps of retail traders to purchase and sell NCD is useful.

    Thank you

  • PRAMOD KUMAR SRIVASTAVA

    upcomming ncd

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