10.75% SREI Infrastructure Finance Limited NCD – Apr’19 – Should you Invest?

Incorporated in 1985, Kolkata-based SIFL is a listed company and is in the business of financing infrastructure projects and equipment. It has come out with public issue of non-convertible debentures (NCD) offering up to 10.75% interest rate.

SREI Infrastructure Finance NCD – Significant Points:

  • Offer Period: April 9 to May 9, 2019
  • Annual Interest Rates for Retail Investors: 9.75% to 10.75% depending on tenure
  • Additional interest of 0.25% for Senior citizens, existing investors and existing employees of the SREI group on the 3 & 5 Year non-cumulative NCDs (Option III, IV, VI & VII)
  • 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: ‘“BWR AA+ (Outlook:Stable)” by Brickworks
  • NCD Size: Rs. 100 Crores with an option to Retain Over-subscription Up to Rs 500 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

SREI Infrastructure Finance NCD – Investment Options:

There are 8 options of investment in SREI Infrastructure Finance NCD.

SREI Infrastructure Finance NCD - Investment Options - April 2019
SREI Infrastructure Finance NCD – Investment Options – April 2019

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

  1. Category I – Institutional Investors – 15% of the issue is reserved
  2. Category II – Non-Institutional Investors, Corporates – 15% of the issue is reserved
  3. Category III – Retail Individual Investors – 70% 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 very less likely hood of credit default
  2. The NCD is secured, which means the above debt is backed by assets of the company
  3. high revenues and profit growth in the past three years
  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. High degree of Debt as compared to tangible assets, which means in rare event of liquidation company may not be able to service all debts.
  2. 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.
  3. 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.

SREI Infrastructure Finance Ltd NCD – April 2019
SREI Infrastructure Finance Ltd NCD – April 2019

  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

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