#SREI Infra Finance issue of secured NCD of Rs. 250 Crore with an
option of retaining upto Rs. 1000 Cr. to
be launched on Sep 7, closing on sep 29, 2016.
About the company - #SREI Infrastructure Finance Ltd, is a RBI
registered non-deposit taking NBFC. Classified as an “Infrastructure Finance
Company” in the year 2011 by RBI. The company was originally incorporated in
New Delhi on March 29, 1985 by the name Shri Radha Krishna Export Industries
Limited with the Registrar of Companies, Delhi & Haryana, in accordance
with the Companies Act 1956 as a Public Limited Company, to undertake lease and
hire purchase financing, bill discounting and manufacture and export of certain
goods. Company’s name was changed to Srei International Limited on May 29, 1992
and further changed to Srei International Finance Limited with effect from
April 12, 1994. The name of the Company was further changed from Srei
International Finance Limited to its existing name Srei Infrastructure Finance
Limited on August 31, 2004. Company is registered as a Non-Banking Financial
Company within the meaning of the Reserve Bank of India Act, 1934.
About the
issue
From liquidity crunch to overflow, the market has seen a major
shift of sentiment in past 6 months. The equity IPOs to Bond issues investors
are lapping it up all.
After an overwhelming response of two tranches of DHFL Secured NCD
issues, SREI is next on the block. SREI’s base issue at Rs. 250 crore, may
retain up to 1000 crore with green-shoe option
Features
in details –
Issue open
and close - Opens on 7th September 2016, closes on 28th September 2016,
however, the allotment is on first cum first served basis and the company may
close issue on oversubscription within a day or two as well.
The NCD
Bond – SREI is offering NCDs which are backed by security/assets.
Hencce, the capital investment is secured by SREI, incase of non-payment/
non-liquidity invesors has the right on liquidating the secured asset to
recover the cost.
Tenor – 400
days, 3 years and 5 years
Annual
yield – Upto 10%, depending on tenor and interest payout option
Face value
– Rs. 1000/ unit
Minimum
and maximum investment - The
minimum application amount is Rs. 10,000 collectively across all options on
NCDs and in multiples of One (1) NCD after the minimum application.
Categories of Invstors and allotment ratio -
Category I – Rs. 200 crore
Category II – Rs. 200 crore
Category III – Individual & HUF Investors – Rs. 600 crore
NRIs, QFIs and foreign nationals cannot invest in this issue.
Credit
Rating - SREI has received an AA+ from BWR, which s second highest rating
after AAA, making it a safe investment option. This issue has received one
notch better than last Secured NCD issue of last year which was at AA.
Format – Investors can hold both in physical or demat
format, demat is not mandatory.
Listing – will be listed
on both exchanges - BSE and NSE
Trading – Allowed from
the first day, no lock-in period
Taxation – Though
the dematerialised NCDs don’t attract TDS, the investment will taxed at short
term (less than a year) and long term (debt investment more than a year are
taxed at 10%) depending on the holding period. The interest will be taxed as
per the tax bracket of the investor.
Also Read
- What is NCD and what makes it so attractive
Series
|
I**
|
II#
|
III***
|
IV**
|
V#
|
VI
|
VII**
|
Frequency of Interest Payment
|
Cumulative
|
Monthly
|
Annual
|
Cumulative
|
Monthly
|
Annual
|
Cumulative
|
Minimum Application
|
Rs. 10000 (10 NCDs)
|
||||||
Face Value/ issue price
|
Rs. 1000/-
|
||||||
In multiples of
|
1000 (1NCD)
|
1000 (1NCD)
|
1000 (1NCD)
|
1000 (1NCD)
|
1000 (1NCD)
|
1000 (1NCD)
|
1000 (1NCD)
|
Tenor
|
400 days
|
3years
|
5 years
|
||||
Coupon per annum
|
NA
|
9.35%
|
9.75%
|
NA
|
9.6%
|
10%
|
NA
|
Effective Yield (per annum) for
Category I, Category II & Category III Investor(s)
|
9.08%
|
9.76%
|
9.82%
|
9.75%
|
10.02%
|
10.04
|
10.00%
|
Mode of Interest Payment
|
Multiple mode
|
||||||
Amount (` / NCD) on Maturity for
Category I, Category II & Category III Investor(s) **
|
Rs. 1100
|
Rs. 1000
|
Rs. 1000
|
Rs. 1322
|
Rs. 1000
|
Rs. 1000
|
Rs. 1611
|
Application
Form for SREI Infra NCDs – Click here
Financial
Health of the company - Annual Results Consolidated Figures in Rs. Crores /
View Standalone
Mar-13
|
Mar-14
|
Mar-15
|
Mar-16
|
TTM
|
|
Sales
|
3,188.74
|
3,235.17
|
3,339.32
|
3,234.14
|
3543.88
|
Expenses
|
518.89
|
521.11
|
696.54
|
629.96
|
945.64
|
Operating
Profit
|
2,669.85
|
2,714.06
|
2,642.78
|
2,604.18
|
2598.24
|
OPM
|
83.73
|
83.89
|
79.14
|
80.52
|
74.7
|
Other
Income
|
25.8
|
25.19
|
21.24
|
27.8
|
49.29
|
Interest
|
2,139.25
|
2,350.28
|
2,274.15
|
2,310.75
|
2278.94
|
Depreciation
|
193.62
|
163.35
|
201.43
|
215.29
|
225.66
|
Profit
before tax
|
362.78
|
225.62
|
188.44
|
105.94
|
142.93
|
Tax
|
102.71
|
88.11
|
67.04
|
44.41
|
51.31
|
Net
Profit
|
263.18
|
138.51
|
129.11
|
72.52
|
100.77
|
EPS
(unadj)
|
5.14
|
2.67
|
2.46
|
1.34
|
|
Dividend
Payout
|
15.88
|
18.18
|
19.49
|
34.69
|
Compounded Sales Growth:
|
Compounded Profit Growth:
|
|||
10 Years:
|
25.49%
|
10 Years:
|
-2.15%
|
|
5 Years:
|
14.66%
|
5 Years:
|
-17.86%
|
|
3 Years:
|
0.47%
|
3 Years:
|
-36.30%
|
|
TTM:
|
10.78%
|
TTM:
|
13.93%
|
|
*data – www.screener.in
After a difficult period of three years, company has seen a upward
trend in last one year. The balance sheet and P&L sheet reflects the same.
Should you
invest in #SREI secured Non-Convertible Bonds?
It is a good debt investment
option with high yield and attractive tenor spread of 400 days, 3 years
and 5 years. #NCDs are being offered by reputed infra-finance company, having
a minimum investment requirement of Rs. 10, 000. The NCDs are secured, backed
by assets, which means incase of default/ non-payment, assets can be liquidated
to repay the debts.
The #coupon rate across segment is expected to be just above 1.5-
2 % from any bank FDs at this point of time. While a bank FD is offering 7.5%
interest on yearly deposit, 400 days option is giving a good 1.5% extra return.
Also, after a rough patch, the financial health of the company has improved
thus interest payment ability. Brickworks has given it a thumbs up by giving it
notch higher Rating of AA+ in the latest issue.
A person with moderate risk profile can invest a part of fixed
income portfolio in this issue. Person in lower tax bracket will get to see
higher return.
Risks in
this issue –
·
NBFC Business is particularly vulnerable to
volatility in interest rates
·
SREI is in infrastructure sector, which has
seen lull for over five years
·
Any increase in the levels of non-performing
assets in loan portfolio, for any reason whatsoever, would adversely affect the
business, results of operations and financial condition
·
SREI derive majority/substantial of our revenues
from our top 20 borrowers. Inability to maintain relationship with such
borrower or any default and non-payment in future or credit losses of our
single borrower or group exposure where they have a substantial exposure could
materially and adversely affect business, future financial performance and
results of operations
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