Piramal Enterprises has come up with a secured NCD issue which is open for subscription now. Piramal Enterprises Limited is a non-deposit taking, RBI registered systemically important NBFC, engaged in providing wholesale and retail lending in India. Piramal Enterprises offer interest rates up to 9.35%. These bonds are issued in 5 different series and for a tenure of 2, 3, 5 and 10 years. Should you invest in Piramal Enterprises NCD’s of October 2023 issue? What are the risk factors one should consider before investing in such high risk NCDs?
About Piramal Enterprises Limited
Company is the flagship entity of the Piramal Group, one of India’s prominent conglomerates. It operates as a non-deposit taking, RBI registered systemically important Non-Banking Financial Company (NBFC) and is engaged in offering wholesale and retail lending services. The retail lending activities are primarily conducted through its wholly-owned subsidiary, Piramal Capital and Housing Finance Company Limited, a housing finance company registered with the National Housing Bank. The company originated in 1947 under the name ‘Indian Schering Limited’ and entered the pharmaceutical industry in 1988 through acquisitions.
Piramal Enterprises NCD – Oct-2023 issue details
| Subscription opening Date | 19-Oct-23 |
| Subscription closure Date | 02-Nov-23 |
| Issuing Security Name | Piramal Enterprises Limited |
| Security Type | Secured, Rated, Listed, Redeemable, Non-Convertible Debentures |
| Issue Size (Base) | Rs 200 Crores |
| Issue Size (Option to retain over subscription) | Rs 800 Crores |
| Total issue size | Rs 1,000 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | I to IV |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 2, 3, 5 and 10 years |
| Interest Payment frequency | Annual |
| Listing on | Within 6 working days on BSE |
| Lead Manager | A. K. Capital Services Limited, JM Financial Limited, Nuvama Wealth Management Limited |
| Debenture Trustee/s | IDBI Trusteeship Services Limited |
NRI’s cannot apply to this NCD subscription.
Piramal Enterprises NCD issue Oct-2023 Prospectus
What are the Piramal Enterprises NCD interest rates?
| Series | I | II | III | IV |
|---|---|---|---|---|
| Frequency of Interest Payment | Annual | Annual | Annual | Annual |
| Tenure (Years) | 2 | 3 | 5 | 10 |
| Coupon (% per Annum) | 9.00% | 9.05% | 9.20% | 9.35% |
| Effective Yield (% per Annum) | 9.00% | 9.05% | 9.19% | 9.34% |
| Amount on Maturity (In Rs.) | 1,000 | 1,000 | 1,000 | 1,000 |
What are the Piramal Enterprises NCD credit ratings?
These NCDs have been rated as ICRA AA/Stable by ICRA Limited. It indicates that Instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
How are the company financials?
Here are the consolidated profits of the company.
- Year ending Mar-22 – Rs 1,998.7 Crores
- Year ending Mar-23 – Rs 9,968.5 Crores
Why to invest in Piramal Enterprises NCD?
- These NCDs offer attractive interest rates up to 9.35%. These are higher compared to bank FD interest rates.
- These are secured bonds. Means, in case the company gets into financial crisis and shut down for some reason, NCD investors would get preference in repayment of capital and interest.
- These NCDs are offered in 5 different series. Investors have a choice to invest in a series that are best suitable to them.
Why not to invest in these bonds?
Here are the risk factors of investing in these bonds.
- High levels of customer defaults and the resultant non-performing assets could adversely affect the company’s business
- Company business is particularly vulnerable to interest rate risk. Volatility in interest rates could have a material adverse effect on its net interest income and financial performance
- Company’s business requires substantial capital and any disruption in the sources of its funding can increase in its average cost of borrowings
- Its retail lending business involves transactions with certain relatively high-risk borrowers. Any default from such customer could adversely affect its business.
- Refer NCD prospectus for complete risk factors.
Should you invest in Piramal Enterprises NCD issue of Oct-2023?
These NCD’s offers high interest rates up to 9.35%. Currently banks or financial institutions are offering lower rates, hence these bonds would attract investors. These are secured NCDs. Means if the company gets into financial crisis or shut down for some reason, investors will get preference in the payment of interest and repayment of capital. These NCDs are rated as AA/Stable by ICRA which are considered as good rating.
On the other hand, there are risk factors of investing in such NCDs. Investing in NBFC company FDs has turned to be riskier. In the past, we could see NBFC companies defaulting NCD payments and in some cases NCD investor’s interest payment got delayed several times in the past.
Investors who understand all these risk factors can invest in these NCDs.
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