10.25% JM Financial Credit Solutions Limited NCD – Nov/Dec’18 – Should you Invest?

JM Financial Credit Solutions Limited has come out with public issue of non-convertible debentures (NCD) offering up to 10.25% interest rate. The issue opens on November 20 and closes on December 20, 2018.

JM Financial Credit Solutions Limited, a venture between JM Financial Limited holding 50.01% and INH Mauritius holding 48.62% is a non-banking finance company with a focus on residential project financing such as funding real estate developers at various stages in the life cycle of a real estate project. The product portfolio consists of Project Finance, Loans against property, Loans against shares, Project at early stage loans and Loans against land.

JM Financial NCD – Significant Points:

  • Offer Period: November 20 to December 20, 2018
  • Annual Interest Rates for Retail Investors: 9.67% to 10.25% depending on tenure
  • Price of each bond: Rs 1,000
  • Minimum Investment: 10 Bonds (Rs 10,000)
  • Max Investment Limit for Retail Investor: Rs 10 Lakhs
  • Credit Rating: “AA/Stable” by ICRA and India Ratings
  • NCD Size: Rs 250 crore with an option to retain over-subscription up to Rs 1,000 crore
  • Allotment: First Come First Serve
  • Listing: Bonds would be listed on BSE and will entail capital gains tax on exit through secondary market

Also ReadKnow NCD – Investment Tips, TDS and Taxation

JM Financial NCD – Investment Options:

There are 6 options of investment in JM Financial NCD.

JM Financial Credit Solutions - NCD Tranche II - November 2018 - Interest Rates

JM Financial Credit Solutions – NCD Tranche II – November 2018 – Interest Rates

Also Read: 25 Tax Free Incomes & Investments in India

JM Financial NCD – Who can Apply?

This issue is open to all Indian residents, HUFs and Institutions.

  • Category I – Qualified Institutional Bidders (QIBs) – 10% of the issue
  • Category II – Non-Institutional Investors (NIIs) – 10% of the issue
  • Category III – High Net Worth Individuals (HNIs) including HUFs – 40% of the issue is reserved
  • Category IV – Resident Indian Individuals including HUFs – 40% of the issue is reserved

NRIs cannot apply for this NCD.

Why you should invest?

  1. AA Credit rating which has low risk of default
  2. The interest rates are 2% higher than your regular Bank FDs
  3. No TDS if invested in Demat Form
  4. Growing company with good promoter background

Also Read: Highest Interest Rate on Recurring Deposits

Why you should not invest?

  1. The banks have started increasing interest rates on fixed deposits and hence it may not be good idea to invest for long term.
  2. You can also invest in high rated company fixed deposits or Small Bank Fixed Deposits offering 9% 
  3. For people in highest tax bracket Tax free bonds are trading at yields of 7% to 7.2% – which would turn out to be better and more secure investment. The problem is its not easy to buy due to very limited liquidity.

How to App

You can apply online by ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work.

Learn: How to apply for NCD issues using ASBA?

In case you don’t want to do it online, you can download the application form from company site or Financial Institutions and submit to collection centers.

Recommendation:

  1. My recommendation is to invest some part of your Fixed Income investment in this NCD Issue
  2. You should always have diversified portfolio be it fixed deposit, NCD or equity investment
  3. Its good idea to remain invested till maturity because liquidity on exchanges are low and hence you would get lower than market value.

If you plan to invest in this issue, do it early as most good NCD issues are over-subscribed before the end date.

JM Financial Credit Solutions Limited - NCD – November 2018

JM Financial Credit Solutions Limited – NCD – November 2018

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