9.75% Shriram City Union Finance Limited NCD – Apr’19 – Should you Invest?

Shriram City Union Finance Limited has come out with public issue of non-convertible debentures (NCD) offering up to 9.75% interest rate. The company Company is a part of the Shriram group of companies, a prominent financial services conglomerate in India. It is a deposit-taking NBFC with multiple product offerings, including small enterprise/MSME financing, loans against gold,financing for two-wheelers, auto loans, personal loans, and housing finance loans.

Shriram City Union Finance NCD – Significant Points:

• Offer Period: April 5 to May 3, 2019
• Annual Interest Rates for Retail Investors: 9.55% to 9.75% 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” by CARE and “CRISIL AA/Stable” by CRISIL
• NCD Size: Rs. 100 Crores with an option to Retain Over-subscription Up to Rs 750 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 Read – Know NCD – Investment Tips, TDS and Taxation

Shriram City Union Finance NCD – Investment Options:

There are 8 options of investment in Shriram City Union Finance NCD.

Click to Know about latest NCD issues

Shriram City Union Finance NCD – Who can Apply?

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

1. Category I – Institutional Investors – 10% of the issue is reserved
2. Category II – Non-Institutional Investors, Corporates – 10% of the issue is reserved
3. Category III – HNIs – 40% of the issue is reserved
4. Category IV – Retail Individual Investors – 40% of the issue is reserved

However NRIs cannot apply for this NCD.

Also Read: 25 Tax Free Incomes & Investments in India

Why you should invest?

1. AA Credit rating means less likely hood of credit default
2. The NCD is secured, which means the above debt is backed by assets of the company
3. Part of the well known Shriram group of companies
4. The interest rates are 2% higher than your regular Bank FDs
5. No TDS if invested in Demat Form

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.

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.

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