The secured NCDs have a face value of ₹1,000 and investors can apply for a minimum of 10 NCDs. The issue has a base size of ₹200 crore, with a green shoe option up to ₹800 crore, aggregating up to ₹1,000 crore and are rated ‘AA’ by ICRA and Care.
The NCDs have tenures of 2, 3, 5 and 10 years with interest rates between 9% and 9.35%. The issue is open and closes on November 2, with an option to close early in the case of oversubscription.
“The company has a strong management team backed by sound financials and a good execution track record. They are adding retail branches and will increase their retail share in the coming years,” said Ajay Manglunia, managing director-investment grade group at JM Financial.
Distributors believe investors can earn 150-250 basis points higher than bank deposits. While a two-year bank deposit from SBI pays 7%, that for a 3-10 year tenure pays 6.5% and 7.5% for senior citizens.
Distributors believe that since interest rates are close to a peak, investors would be better off opting for the 5- or 10-year tenure, over shorter tenures. “Interest rates in India are close to a peak and could fall over the next 1-2 years. Investors can lock into a 5- or 10-year option, where they will earn higher rates for longer with a chance of earning a capital appreciation in case rates fall,” said Anup Bhaiya, MD at Money Honey Financial Service, a Mumbai-based distributor.
“Investors can allocate 30-40% of their fixed income portfolio to bonds, with allocation to this NCD between 2-4%,” said Vijay Kuppa, CEO at Incred Money.Financial planners, however, believe investors should diversify their bond portfolios across a number of companies with different maturities and not allocate high amounts to a single product.
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