SREI Infra Finance Secured NCD-July-2015 – Can we invest?
After 9 months, SREI Infrastructure finance again comes back with secured NCD’s with 10.75% interest rates. Earlier NCD’s have come to medium term period of 2 to 5 year period. This time, it has come with medium term of 39 months and 60 months. Can we invest in SREI Infra Finance Secured NCD of July, 2015. What are its features and the risks involved in SREI Infra Finance NCD? What is the change in company performance compared to our earlier review?
About SREI Infrastructure Finance Ltd
SREI Infrastructure finance primary lends finance to infrastructure projects. It is into equipment finance and project advisory business.
Also Read: Which are the companies offering highest interest rates on company Fixed Deposit Schemes?
SREI Infra Finance Secured NCD – July-2015
SREI Infrastructure Finance is issuing 39 months and 60 months secured NCD’s. For secured NCD, the assets are backed up for principal and interest. In case unforeseen thing happening to the company, investors of NCD would still get their principal investment and interest.
Features of SREI Infra Finance Secured NCD, July 2015
- Start Date: 1-July-2015
- End date: 20-July-2015
- NCD’s are available for 39 months and 60 month period.
- Interest rates are up to 10.75% per annum depending on the series chosen by you.
- There would be 0.25% extra interest paid to existing customers and existing shareholders.
- Interest payable monthly, annually or at maturity depending on the series of NCD.
- 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 only. Hence, these are liquid investments.
- Non-resident Indians (NRI’s) cannot invest in these NCD’s.
- The issue size is Rs 2,000 Million with an option to retain upto Rs 10,000 Million.
- NCD ratings are CARE AA- (double A minus) by CARE and BWR AA by Brickworks credit agency.
Below is the Interest rate chart
SREI Infra Finance Secured NCD, July-2015 – How the returns taxed?
There would not be any TDS deduction on the interest portion if you have applied through demat account.
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 grown from Rs 3,260 Crores (FY 2014-15) to Rs 3,360 Crores (FY 2013-14) indicating a growth of 3%.
- Profits have reduced from Rs 138.51 Crores (FY 2013-14) to Rs 129.11 Crores (FY 2014-15) indicating a negative growth of 6%.
- Net Non Performing Assets (NPA) of the company is 2.77% (FY 2012-13) vs 3.53% (FY 2013-14) Vs 3.84% (FY 2014-15).
Why to invest?
- Company is doing good in terms of revenues.
- These are secured NCD’s. Means in case of any unforeseen thing happening to companies, 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 10.79%.
- No TDS if you invest in demat form.
Why not to invest?
- Infrastructure finance companies are risky. Means the profits indicated now can reduce in future due to increase in interest rate payments.
- Due to the high cost of funding, CARE has downgraded its rating to CARE AA- (minus) during Nov-2012.
- There is a profitability dip in the last few financial years. The decline in profits is an indication of negative performance of the company. There could be delay in payment of interest and repayment of capital. One should be cautious regarding this.
- Increase in Non Performing Assets (NPA) to 3.84% is a major concern.
Also Read: What are the latest interest rates on Post Office Small Saving Schemes?
How to apply?
Majority of the stock brokers who maintains demat accounts are offering the service of FD’s subscription too. You can directly apply through ICICI Securities or Karvy securities. However, you need to have a demat account for this. If you do not have demat account, you can visit ICICI Direct or Edelweiss Capital website, download application form and submit it at authorized centres.
Download SREI Prospectus from SEBI Website here.
Conclusion: SREI Infra Finance NCD of July-2015 are secured. However, the dip in the profits of the company in last few financial years is a major concern. Since these trades on BSE, you can exit if required. If you want to park your money for 39 months or 60 months time frame and consider taking some risk, you can invest in SREI Infra Finance NCD of July, 2015 and get good returns.
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SREI Infra Finance Secured NCD-July-2015
does it make sense to buy it now from stock market
When existing bonds of same co are avilable at discount,why should one apply? Wouldn’t it be advisable to go for them only, if at all one wants to invest.?
Yes. IF they are available at lesser price, one can invest in that
where/how to buy from secondary market at discount ? any finance companies selling in big lots ? whom to contact ? please share…
Hi Ket, These are traded like any other stock. If you have demat account, go to the NCD / Bonds menu and click buy option. You would know the sellers who are selling the bonds.
Hi Suresh, I have tried it..but i am bever able to execute the order at 13% – 15% range the LTP shows. It seems like these are traded by private placement in large amounts only (lakhs or crores)…and only “Reported” to the exchanges as it is mandatory…Retail traders are never successfull in getting any at the YTM above 11%..so for retail investor with small amounts only option is to buy at IPO. Have you ever been able to successsfully buy these from secondary market at the YTM more than 13-14% ?
Tricky question. I never tried for such cases, however I was able to trade them on stock exchanges.