10.15% Manappuram Finance NCD – Jan’19 – Should you Invest?

Manappuram Finance Limited has come out with latest NCD (non-convertible debentures) offering up to 10.15% interest rate. The issue opens on January 28 and closes on February 27 , 2019.

Manappuram Finance Ltd is one of the major non-banking financial company in the gold finance business situated in Thrissur, Kerala. It has over 3200+ branches across 25 states, a staff strength of over 15,000+ people. It provides loans against the pledge of household and/or used gold jewelry and provide short-term personal and business gold loan primarily to retail customers.

Manappuram Finance NCD – Significant Points:

  • Offer Period: January 28 to February 27, 2019
  • Annual Interest Rates for Retail Investors: 9.35% to 10.15% 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: CARE AA/Stable, Brickwork AA+/Stable
  • NCD Size: Rs 150 crore with option to retain over-subscription upto Rs 737 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

Manappuram Finance NCD – Investment Options:

There are 7 options of investment in Manappuram Finance NCD.

Manappuram Finance Ltd NCD - January 2019 - Investment Options
Manappuram Finance Ltd NCD – January 2019 – Investment Options

Also Read: 25 Tax Free Incomes & Investments in India

Manappuram Finance NCD – Who can Apply?

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

  • Category I – QIB Investors – 10% of the issue is reserved
  • Category II – Corporate Investors – 10% of the issue is reserved
  • Category III – HNIs Investors – 30% of the issue is reserved
  • Category IV – Retail Individual Investors including HUFs – 50% of the issue is reserved

NRIs cannot apply for this NCD.

Why you should invest?

  1. AA Credit rating means very less likely hood of credit default
  2. The interest rates are 2% higher than your regular Bank FDs
  3. No TDS if invested in Demat Form

Also Read: Highest Interest Rate on Recurring Deposits

Why you should not invest?

  1. There are NCDs available in secondary market which have higher yields with similar rating. The problem is low liquidity and hence is difficult to buy in large numbers.
  2. The present Tax Free Bonds are offering yields up to 6.5% in secondary market, which is better investment for People in highest tax bracket.
  3. You can also invest in high rated company fixed deposits

How to Apply?

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.

Manappuram Finance Ltd NCD – Jan 2019
Manappuram Finance Ltd NCD – Jan 2019

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.

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