SREI Infra Finance NCD Feb 2018 Issue – Should you subscribe?
After 1 year, SREI Infra Finance is again coming up with Secured and Unsecured NCD’s in Feb/Mar-2018. SREI Infra Finance NCD 2018 would open for subscription on 9th February, 2018. It offers yield up to 9.5%. It provides 400 days, 3 years and 5 years and 10 years tenure NCD’s. Last year it offered upto 5 years NCD only. Since interest rates are falling down, investors might be planning to invest in long term debt instruments like these NCDs. What are the features of SREI Infrastructure Finance NCD of 2018? What are the risk factors one should consider before investing in such NCD’s? Who should invest in SREI Infra Finance NCD 2018?
Also Read: Which are the Best Investment Options for 3 months to 12 months period?
About SREI Infrastructure Finance Ltd
SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business.
Overview of SREI Infra Finance NCD Feb 2018 Issue
SREI Infrastructure Finance is issuing 400 days, 3 years,5 years and 10 years NCD’s. While 400 days, 3 years and 5 years are secured NCDs for 10 years these are unsecured Subordinated NCDs.
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 2018 Issue
1) Start Date: 9-Feb-2018
2) End date: 7-Mar-2018
3) Secured NCD’s are issued for 400 days, 3 years, 5 year and 10 years tenure.
4) Interest rates are up to 9.5% per annum depending on the series chosen by you.
5) The yield would work out upto 9.5%, depending on the series chosen by you.
6) Interest payable monthly, annually or at maturity depending on the series of NCD.
7) The face value of the bond is Rs 1,000.
8) 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.
9) These NCD bonds would be listed on BSE and NSE. Hence, these are liquid investments.
10) Non-resident Indians (NRI’s) cannot invest in these NCD’s.
11) The base issue size is Rs 200 Crores with an option to retain oversubscription upto is Rs 2,000 Crores.
What are the credit ratings for these NCDs?
1) The Secured NCDs have been rated ‘BWR AA+ (BWR Double A Plus)’ by BRICKWORK.
2) The Unsecured NCDs have been rated ‘BWR AA+(BWR Double A Plus)’ by BRICKWORK.
Below is the Interest rate chart for SREI Infra Finance NCD Feb/March 2018 Issue
SREI Infra Finance NCD Feb 2018 Issue – How the returns taxed?
1) For investors who are applying through demat account, there would not be TDS deduction.
2) 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?
1) Its revenues increased from Rs 1,896 Crores for FY2016 to Rs 2,299 Crores for FY2017.
2) Its profits increased from Rs 57 Crores for FY2016 to Rs 96 Crores for FY2017.
Why to invest in SREI Infra Finance NCD Feb 2018 Issue?
1) Good revenue and margin growth in the last few years.
2) Secured NCD’s are good for investment. 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.
3) Attractive annualized yield of 9.5%.
4) Its consolidated numbers show NPA is on declining mode which is a good sign for the company. Net NPA in FY2015 was 3.84%, FY16 was 3.09%, FY17 was 1.98% and 6 months ended Sep-2017 was 1.5%.
5) No TDS if you invest in demat form.
Also Read: 8 Good Mutual Funds to save Income Tax in India
Why not to invest in SREI Infra Finance NCD Feb 2018 Issue?
1) Infrastructure finance companies are risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
2) Unsecured NCD’s are high risk.
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 2018 Prospectus here.
Conclusion: SREI Infrastructure Finance NCD of Feb/March-2018 offer high interest rates. 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 to secured NCDs of SREI Infra Finance. One should stay away from unsecured NCDs. Alternatively, you can consider debt mutual funds which can give you similar returns, however not guaranteed.
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SREI Infra Finance NCD Feb 2018 Issue
I plan to invest 3lacs for 5 years in this. Is it a good idea? Why do you recommend it is better to invest only for max 3 years? Thank you.
Hi Rajagopal, Investment in NCD’s are high risk if one want to invest in longer term as we do not know how company would perform in the longer run. We have seen several companies in the past where they are delaying interest payment and even capital invested. Hence in long run we raelly can’t say, hence I was asking investors to invest for short term
Is there any lock in period
There is no lock-in period. But you cannot surrender them to company before the maturity date. You can sell them on BSE stock exchange
How to apply for this NCD?
If you have demat account with ICICI Direct or any other major 3-in-1 account, you can just login and invest online. If it is not available in your demat account, you need to check brochure about ways to invest in it
Please write something about best stock
Nice article as usual. Thanks Suresh.
I have a query regarding redemption before the tenure.
If I buy the bonds for 5 years tenure and sell the bonds after 1 year or after,
– for 1 lakh investment, How much will I get after 1 year
-Any penalty for early redemption like FD
-What is the minimum lock in period
Hi Vijayan, You cannot redeem from company before tenure. However, you can sell these NCDs on BSE to others. These would be in your demat account like shares e.e. in this case you would have 5 bonds. You can sell 1 or 5 bonds. The rate would be quoted by the purchaser. It can be Rs 1,000 or higher or lower depending on the demand and price to be quoted by purchaser.
Please explain the below point, which is confusing. Is the additional incentive rate 0.25% is applicable only for Category III investors? Coz I am an existing investor with SREI
//^Additional incentive of 0.25% p.a. for Category III investors who are the existing holders of NCD(s)/Bond(s) previously issued by our Company and Srei Equipment Finance Limited (“SEFL”), in the past public issues of NCD(s) and/ or are equity shareholder(s) of our Company and/or are Senior Citizen(s) and or/ are Employee(s) of Srei Group, on Deemed Date of Allotment and provided the NCDs issued under the Tranche 1 Issue are held on the relevant Record Date for interest payment for Series III, Series IV, Series VI, Series VII, , Series IX and/or Series X NCDs (Secured or Unsecured NCDs) and relevant Record Date for redemption for Series V, Series VIII and/or Series XI NCDs (Secured or Unsecured NCDs).Additional incentive will not be applicable for Series I and Series II applicant irrespective of any Category of Investors.//
Hi Vijayan, Since you are existing SREI Infra finance NCD holder, you would get 0.25% additional interest per annum. However, you should hold this till record date of interest rate.
Thank you very much for the swift reply