After 1 year, 3 months, SREI Infra Finance is coming up with Secured NCD’s in Sep 2016. SREI Infra Finance NCD 2016 would open for subscription on 7th September, 2016. It offers yield up to 10%. It provides 400 days, 3 years and 5 years tenure NCD’s. 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 NCD 2016?
About SREI Infrastructure Finance Ltd
SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business.
About SREI Infra NCD 2016
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 unforeseen thing happening to the company and company gets wind-up (closed), investors of NCD would still get their principal investment and interest.
Features of SREI Infra NCD 2016
- Start Date: 7-Sep-2016
- End date: 28-Sep-2016
- NCD’s are available for 400 days, 3 years and 5 year investment period.
- Interest rates are up to 9.75% per annum depending on the series chosen by you.
- The yield would work out upto 10%, 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 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 and NSE only. Hence, these are liquid investments.
- Non-resident Indians (NRI’s) cannot invest in these NCD’s.
- The issue size is Rs 250 Crores with an option to retain over subscription upto Rs 1,000 Million.
- NCD ratings are BWR AA+ (BWR AA Plus) by Brickworks credit agency.
Below is the Interest rate chart for SREI Infra NCD 2016
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SREI Infra NCD 2016 – 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.
How the company is doing in terms of Financials?
- The total consolidated income of the company has declined from Rs 3,360 Crores (FY 2014-15) to Rs 3,261 Crores (FY 2015-16) indicating a negative growth of 3%.
- Profits have reduced from Rs 129.11 Crores (FY 2014-15) to Rs 72.52 Crores (FY 2015-16) indicating a negative growth of 44%.
Why to invest in SREI Infra NCD 2016?
- These are secured NCD’s. Means in case of any unforeseen thing happening to this company and it would get windup, 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 10%.
- No TDS if you invest in demat form.
Also Read: Best Mutual Funds for high risk investors
Why not to invest in SREI Infra Finance NCD 2016?
- Profits are in declining mode. FY15 profits were Rs 129 Crores Vs FY 16 profits 72.5 Crores. The company would pay interest from profits. If their profits are in declining mode, there could be a delay in payment of interest.
- Infrastructure finance companies are risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
- High Non Performing Assets (NPA) of 3.54% for FY16 is a major concern.
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 through ICICI Securities or Karvy securities. However, you need to have a demat account for this.
Download SREI Infra Finance NCD Sep 2016 Prospectus here
Conclusion: SREI Infra Finance NCD of Sep-2016 are secured. However, decline in revenues and dip in the profits of the company in last few financial years is a major concern. If you want to park your money for short term of 400 days or medium term of 3 years and willing to take high risk, you can subscribe. Alternatively, you can wait for high rated NCD’s in coming months and subscribe to them. Personally, I would like to stay away from such NCD's.
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