Sakthi Finance Limited is coming up with a Secured Redeemable Non-Convertible Debenture (NCD) issue in March 2025. These NCDs offer attractive interest rates with tenures ranging from 24 to 85 months. In this article, we will review the Sakthi Finance NCD March 2025 issue, including interest rates, risk factors, and whether investors should consider investing in it.
About Sakthi Finance Limited
Founded in 1955, Sakthi Finance Limited is a non-banking financial company (NBFC) and part of the Sakthi Group. The company primarily finances used commercial vehicles and also provides funding for the purchase of machinery, cars, jeeps, and multi-purpose vehicles, particularly for infrastructure projects.
Sakthi Finance NCD Issue – March 2025 – Key Details
- Subscription Opening Date: 17-Mar-25
- Subscription Closing Date: 28-Mar-25
- Issuing Security Name: Sakthi Finance Limited
- Security Type: Secured Redeemable Non-Convertible Debentures
- Issue Size (Base): ₹ 50 Crores
- Issue Size (Option to Retain Over Subscription): ₹ 50 Crores
- Total Issue Size: ₹ 100 Crores
- Issue Price: ₹ 1,000 per bond
- Face Value: ₹ 1,000 per bond
- Series: I to VII
- Minimum Lot Size: 10 bonds and 1 bond thereafter
- Tenure Options: 24, 36, 60, and 85 months
- Interest Payment Frequency: Monthly and Cumulative
- Listing: Within 6 working days on BSE/NSE
- Lead Manager: Bonanza Portfolio Limited
- Debenture Trustee: Catalyst Trusteeship Limited
Sakthi Finance NCD Interest Rates and Yield
Below are the details of interest rates, coupon rates, and effective yields for different tenures and series:
| Series | I | II | III | IV | V | VI | VII |
|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Cumulative | Monthly | Cumulative | Monthly | Cumulative | Cumulative |
| Tenure (Months) | 24 | 24 | 36 | 36 | 60 | 60 | 85 |
| Coupon (% per Annum) | 9.00% | NA | 9.25% | NA | 10.25% | NA | NA |
| Effective Yield (% per Annum) | 9.00% | 9.31% | 9.25% | 9.58% | 10.25% | 10.65% | 10.38% |
| Amount on Maturity (₹.) | 1,000.00 | 1,194.83 | 1,000.00 | 1,315.66 | 1,000.00 | 1,658.72 | 2,013.13 |
Sakthi Finance NCD Issue – Credit Ratings
ICRA has assigned Sakthi Finance NCD a rating of ICRA BBB (Stable).
- Instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations.
- Such instruments carry moderate credit risk.
How Will the Company Utilize the Funds?
The funds raised from this NCD issue will be utilized for the following purposes:
- 75% for lending and financing activities (asset financing and business operations).
- 25% for general corporate purposes and other associated business activities.
Positive Factors – Why to Invest in Sakthi Finance NCD?
✅ High Interest Rates – Attractive yields up to 10.65% per annum, which is higher than many bank FDs.
✅ Secured NCDs – These are secured debentures, meaning they are backed by company assets, reducing the default risk.
✅ Varied Tenure Options – Investors can choose from 24, 36, 60, or 85 months, based on their investment horizon.
✅ Monthly & Cumulative Interest Options – Investors seeking regular income can opt for monthly interest, while long-term investors can choose cumulative options for compounded returns.
✅ Listing on BSE/NSE – Provides an exit option for investors before maturity.
Risk Factors – What Are the Concerns?
❌ Moderate Credit Rating – The rating ICRA BBB (Stable) indicates moderate risk, making it less secure compared to A-rated or AAA-rated NCDs.
❌ Sector-Specific Risk – The company operates in vehicle financing, which is cyclical and affected by economic downturns.
❌ Liquidity Risk – While NCDs are listed, the trading volume on the exchange might be low, making it difficult to sell before maturity.
❌ Company-Specific Risk – Sakthi Finance is not a large NBFC, which could pose additional financial stability concerns.
Who Should Invest in Sakthi Finance NCDs?
- Investors looking for higher fixed-income returns than FDs.
- Those who can take moderate risk due to BBB-rated credit quality.
- Investors needing regular income via monthly interest payments.
- Those willing to hold till maturity, as liquidity on the exchange could be low.
Should You Invest in Sakthi Finance NCD March 2025?
Sakthi Finance NCDs offer high-interest rates of up to 10.65%, secured backing, and flexible tenure options. However, the BBB credit rating signals moderate risk, and the company operates in a sector prone to economic fluctuations.
✅ If you are a high-risk investor looking for better fixed-income returns than FDs, you can consider investing a portion of your portfolio in these NCDs.
❌ However, conservative investors may prefer higher-rated NCDs from well-established financial institutions.
Discover more from Myinvestmentideas.com
Subscribe to get the latest posts sent to your email.