9.5% SREI Infra Finance NCD Feb 2017 Issue – Should you subscribe?
SREI Infra Finance NCD Feb 2017 Issue
After 4 months, SREI Infrastructure Finance is coming up with Secured NCD’s in Jan/Feb-2017. SREI Infra Finance NCD 2017 would open for subscription on 30th January, 2017. It offers yield up to 9.5%. It provides 400 days, 3 years and 5 years tenure secured NCD’s. Earlier, from SREI group, SREI Equipment Finance NCD’s were opened which offered yield upto 9.7%. Compared to that this NCD offers 0.2% lower yield. 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 Finance NCD 2017?
About SREI Infrastructure Finance Ltd
SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business.
SREI Infra Finance NCD – Feb 2017
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 non performance of the company and company gets wind-up (closed), investors of NCD would still get their principal investment and interest.
Features of SREI Infra Finance NCD – Feb 2017
- Start Date: 30-Jan-2017
- End date: 23-Feb-2017
- NCD’s are available for 400 days, 3 years and 5 year investment period.
- Interest rates are up to 9.5% per annum depending on the series chosen by you.
- The yield would work out upto 9.5%, 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. 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 706.63 Crores.
- NCD ratings are BWR AA+ (BWR AA Plus) by Brickworks credit agency.
Below is the Interest rate chart for SREI Infra Finance NCD – Feb 2017
SREI Infra Finance NCD – Feb 2017 – 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%. For 6 months ended Sep-2016, its revenues were at Rs 2,214 Crores compared to ealier year 6 months ended Sep-2015 of 1,640 Crores indicating 35% increase in revenues.
- 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%. For 6 months ended Sep-2016, its profits are at Rs 113 Crores compared to last year 6 months ended Sep-2016 of Rs 35 Crores indicating a jump of 232%.
Why to invest in SREI Infra Finance NCD – Feb 2017?
- While year on year, it showed reduction in revenues in FY16 compared to FY15, its revenues for 6 months ended Sep-21016 indicates positive sign.
- Similarly, its profits has zoomed for 6 months ended Sep-2016 compared to last year. Higher profits indicate strong fundamentals and high capability to repay principal and interest to NCD holders.
- These are secured NCD’s. Means in case of any unforeseen thing happening to this company and it would get windup/closed, 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 9.5%.
- No TDS if you invest in demat form.
Why not to invest in SREI Infra Finance NCD – Feb 2017?
- Infrastructure finance companies are risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
- Increase in Non Performing Assets (NPA) to 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 by login to demat account portal.
Download SREI Infrastructure Finance NCD – Feb 2017 Prospectus here.
Conclusion: SREI Infrastructure Finance NCD of Jan/Feb-2017 are secured. Since these trades on BSE, you can exit if required. If you want to park your money for short term of 400 days or medium term of 3 years and willing to take risk, you can subscribe. Alternatively, you can consider debt mutual funds which can give you similar returns, however not guaranteed.
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