Mahindra Financial Services NCD – May 2016 Review
Mahindra & Mahindra Financial Services NCD for May-2016 has opened for subscription today i.e. 25th May, 2016. It is issuing un-secured NCD’s for the first time. The yield rates are as high as 9% per annum. Mahindra & Mahindra Financial Services has good credit rating from ICRA and IND Ratings. Should you invest in Mahindra Financial Services NCD of May-2016? What are the risk factors you should consider if you want to invest in M&M Mahindra Financial Services NCD?
About Mahindra & Mahindra (M&M) Financial Services Limited
Mahindra & Mahindra Financial Services Limited is one of the leading non-banking finance companies (NBFC) with customers primarily in the rural and semi-urban markets of India. The Company is a part of the Mahindra group, which is one of the largest business group in India. It is primarily engaged in providing financing for new and pre-owned auto and utility vehicles, tractors, cars and commercial vehicles. It also provides housing finance, personal loans, financing to small and medium enterprises, insurance broking and mutual fund distribution services. In addition the company, among other services, provide wholesale inventory financing to dealers and retail-financing to customers in the United States for purchase of Mahindra group products through Mahindra Finance USA LLC, its joint venture with a subsidiary of the Rabobank group.
Mahindra Financial Services NCD May-2016
Mahindra Financial Services is issuing un-secured redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 250 Crores with an option to retain another Rs 750 Crores over subscription totaling to Rs 1,000 Crores. It comes with 9 different options, which contains 66 months to 120 month tenure.
About Mahindra Financial Services Unsecured NCD’s of May-2016
For un-secured NCD the assets are NOT backed up for principal and interest. In case something happens to company performance and company is closed, investors would be given normal preference in repayment of capital and interest.
Features of Mahindra Financial Services NCD of May-2016
- Issue start date: 25-May-2016
- Issue end date: 10-Jun-2016
- NCD’s are available in 9 different options.
- Interest payable quarterly, annual and cumulative, depending on the option of NCD.
- The 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 NCD’s.
- These are CARE AAA and INDAAA rated, which indicates a high degree of safety for payment of principal and interest.
- The prospectus can be downloaded from the this website link
Here are the interest rates on the May-2016 NCD’s of Mahindra Financial Services
How is the company doing in terms of Financials?
- Revenues of the company have increased from Rs 6,021Crores (FY 2014-15) to Rs 6,553 Crores (FY 2015-16) indicating a growth of 9%.
- Profits after interest and taxes have reduced from Rs 912 Crores (FY 2014-15) to Rs 772 Crores (FY 2015-16) indicating a negative growth of 15%.
Why to invest?
- Leading NBFC company
- Attractive interest rates where one can get 9% yield.
- Good credit rating of the company
Why not to invest?
- Unsecured NCD’s. Means something happens to company performance and it gets wind-up, investors would be given less preference in repayment.
- Profits are shrinking. It has seen 14% negative growth. Reduction in profits can lead to delay in interest payment.
How to apply?
If you have demat account, you can apply through your demat broker online. These can be easily sold at later point of time if you can take them in demat form, however you can sell at market price only. You can also apply in physical form by visiting the company website and downloading the application form and preparing the cheque and submitting at collection centres.
Conclusion: Mahindra & Mahindra Financial Services NCD’s are unsecured, however the company has good credit rating. High risk takers can invest in this NCD, however should consider the negative points and risk factors indicated above.
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Mahindra Financial Services NCD – May 2016
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