9.70% Shriram Transport Finance NCD – October 2018 – Should you Invest?
Shriram Transport Finance has come out with latest NCD (non-convertible debentures) offering up to 9.70% interest rate. The issue opens on October 15 and closes on October 29, 2018.
Shriram Transport is part of Shriram Capital and is a dominant player in commercial vehicle and pre-owned vehicles finance.
Shriram Transport Finance NCD – Significant Points:
Offer Period: October 15 to 29, 2018
Annual Interest Rates for Retail Investors: 9.12% to 9.70% depending on tenure [0.25% additional interest rate for Senior Citizens]
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: “CRISIL AA+/Stable” and “IND AA+ / Outlook: Stable”
NCD Size: Issue size is Rs 300 crore (with an option to retain over-subscription amount of up to Rs 1,350 crore more)
NRIs are NOT eligible to apply to this NCD issue.
Allotment: First Come First Serve
Listing: Bonds would be listed on BSE and NSE and will entail capital gains tax on exit through secondary market
Shriram Transport Finance NCD – Investment Options:
There are 7 options of investment in Shriram Transport Finance NCD.
Senior Citizens on the Deemed Date of Allotment shall be eligible for an additional incentive of 0.25% p.a. provided the NCDs issued under the proposed Issue are continued to be held by such investors. Accordingly, the amount payable on redemption to such Senior Citizens for NCDs under series VI and Series VII is Rs 1,318.67 and 1,592.70 per NCD respectively provided its held till maturity.
Company shall allocate and allot Series III NCDs wherein the Applicants have not indicated their choice of the relevant NCD Series.
The bonds can be purchased in Demat Form only.
Shriram Transport Finance NCD – Who can Apply?
This issue is open to all Indian residents, HUFs and Institutions.
The banks have started increasing interest rates on fixed deposits and hence it may not be good idea to invest for long term (DO not go for 10 year tenure – you might get better opportunities going forward).
For people in highest tax bracket Tax free bonds are trading at yields of 6.1% to 6.3% – which would turn out to be better and more secure investment
How to Apply?
If you have Demat account apply through that or 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
In case you don’t want to do it online, you can download the application form from Financial Institutions and submit to collection centers.
Recommendation:
My recommendation is to invest some part of your Fixed Income investment in this NCD Issue (3 or 5 year tenure bonds only)
You should always have diversified portfolio be it fixed deposit, NCD or equity investment
Its good idea to remain invested till maturity because liquidity on exchanges is low and hence you would get lower than market value
If you plan to invest in this issue, do it on first day as most NCD issues are over-subscribed within few days of opening.
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Amit
Hi Readers! I am Amit, the mind behind Apnaplan.com
I am MBA from NITIE, Mumbai and BIT from Delhi University.
This blog is my online diary where I write about my tryst with my investment decisions. In the 400+ posts on this blog you will find articles on Personal Financial Planning, Investments, Retirement Planning, Insurance, Loans, Fixed Deposits, Provident Funds, Stock Markets, Gold, Silver, Real Estate Investment, Credit Cards, Credit Score, Taxation, Inheritance Planning and Reviews on various Financial Products.