JM Financial Products NCD Review
JM Financial Products is coming up with secured NCD bonds now. These Tranche-I NCD bonds would open for subscription on 23rd September 2021. JM Financial Products is a leading Systematic Important Non-Deposit Taking NBFC in India. It offers interest rates up to 8.3%. These NCDs are offered for 39 months to 100 months tenure. These interests are paid either monthly or on maturity. Should you invest in JM Financial Products NCD September 2021? What are the risk factors one should consider before investing in such high risk NCDs?
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About JM Financial Products Limited
Company is a systemically important non-deposit taking NBFC. Company is incorporated in 1984 and broadened its services from lease syndication and vehicle leasing to offering financial solutions through lending, syndication, participation in lending for securities issuance and distribution.
JM Financial Products NCD – September/October 2021 – Issue Details
Issue dates: NCD issue opens for subscription on 23rd October 2021 and closes on 14th October 2021. These are allotted on first come first serve basis. Hence the issue can be closed before this date if it is oversubscribed before the closure date.
Options: These Tranche-I NCDs are issued in 4 different series. These NCDs are issued for 39 months, 60 months and 100 months tenure.
Coupon Interest Rates: The interest rates are ranging between 7.91% to 8.3%. All options would pay annual interest except for Series-III where investors can get monthly interest.
Nature of instruments: These are secured NCD bonds.
Issue Size: The base issue size is Rs 100 Crores with an option to retain oversubscription up to Rs 400 Crores totaling to Rs 500 Crores.
Issue Price of NCD Bond: The issue price is Rs 1,000 per bond.
Minimum Investment: Investors need to invest minimum of Rs 10 bonds i.e., Rs 10,000 and in multiples of Rs 1,000 each.
Listing: These NCD bonds would be listed on BSE within 6 working days from the date of closure of issue.
Lead Manager: Equirus Capital and JM Financial Limited are the lead managers of the issue.
Download JM Financial Products September 2021 NCD Prospectus
JM Financial Products NCD Interest rates
What is T-Bill rate + 315 bps interest paid for Series-I?
Series-I offers interest rates which is T-Bill rate + 315 bps spread.
The Treasury Bill rates are ranging between 3.2% to 3.5% for 3 months. Means one can expect 6.35% (3.2% + 315 bps) to 6.65% (3.5% + 315 bps) or little higher.
What are the credit ratings for these NCDs?
These NCDs have been rated as AA/Stable from ICRA and Crisil Ratings. Such rating indicates high degree of safety regarding timely servicing of financial obligations.
How is the company doing in terms of profits?
Here are the details of profits of the company.
Year ending Mar-2019 – Rs 836.48 Crores
Year ending Mar-2020 – Rs 777.95 Crores
Year ending Mar-2021 – Rs 808.17 Crores
Why to invest in these NCDs?
1) This JM Financial NCD offer attractive interest rates where investors can get interest up to 8.3% per annum and yield up to 8.3%
2) JM Financial Products generates consistent margins. This means that company has ability to pay interest payment on time to its NCD holders without any delay.
3) It issues secured NCDs. These NCDs are safe compared to unsecured NCDs. In case company gets wind-up/shut down for some reason, secured NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.
4) Company NCDs are rated as AA/Stable by ICRA and CRISIL Ratings which indicates high safety and low risk.
Why not to invest in these NCDs?
1) Covid-19 pandemic impact on company business is uncertain and cannot be predicted in future.
2) Company, subsidiary, promoter and group companies are involved in certain legal and other proceedings including criminal proceedings. If these are determined against company, it can affect company business.
3) Company dependence on JM Financial Credit Solutions for origination of loans in real estate segment.
4) The credit rating issued today can change in future and not guaranteed.
5) Refer prospectus for complete risk factors.
How to subscribe to these NCDs?
This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.
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Should you invest in JM Financial Products NCD?
JM Financial Products NCD offer high interest rates and yield. Banks are offering low interest rates; hence investors would get tempted with such NCDs. These NCDs are rated as AA/Stable by ICRA and CRISIL Ratings which are considered as good rating. Beyond this, these are secured NCDs. Moderate to High risk investors can invest in such NCDs. Low-risk investors should stay away from these NCD bonds.
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SREI NCD failed to pay interest & original amt, matter is with NCLT
Secured NCD with high credit rating etc phrases have absolutely no meaning when we see literally what happened to the fate of secured NCD holdes in DHFL. With the tenure period 60 months as minimum, anything detrimental to investors can happen!
Exactly. Hence we generally summarize such NCDs as high risk.
We have this Company previous NCDS ,paying interest in time . Quoted below issue price in Deep Covid Crisis period(now quoting above) indicates it is not as Strong as L&T finance.
Thank you Suresh for all this latest information regarding new NCDs. The interest rates are good but I think there are two drawbacks in this scheme :
1) The options are few , three only and only one is providing monthly returns.
2) The tenure is too long. There are no two or three year options.
Thanks again for your articles.
I agree. Generally companies come with NCDs with 8-10 options. This NCD has only 4.
AA-Stable rated bonds at 8.20% yield is a daring attempt by JM Financial.