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12% SREI Infra Finance NCD May 2014 – Details & Review

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srei-infrastructure-finance

SREI Infrastructure Finance has opened its public issue of NCDs on 09 May 2014 and it closes on 9-Jun-2014

Type of Instruments – Secured Redeemable NCDs

Size of Issue – Rs 150 crores

Listing – Proposed to be listed on BSE

Credit RatingAA-/negative by CARE  and AA by BRICKWORK

Investment option – Monthly / Annually / Cumulative Interest for 3 yrs, 5 yrs

srei-ncd-may-2014

About Company

SREI is a Public Financial Institution (PFI). It is a RBI registered non deposit taking NBFC.

The company provides financial services to its customers engaged in infrastructure development and construction, with particular focus on power, road, telecom, port, oil and gas and special economic zone (SEZ) sectors in India with a medium to long term perspective.

Total income on a standalone basis for the period ended March 31, 2013 and March 31, 2012 stood at Rs. 1,666 crore and Rs. 1,181 crore respectively. Net profit for the same periods was registered at Rs. 94.96 crore and Rs. 57.96 crore respectively.

Gross NPAs of the company as on March 31, 2013 stood at 2.77% as against 1.58% as on March 31, 2012, while Net NPAs were at 2.30% as against 1.18%.

Positive Points

  • High Coupon rate of 12% as compared to Bank FD rates of 9%
  • If you fall in the lower tax bracket, post-tax returns for some options in this NCD are superior to that of tax-free bonds.

Negative factors

  • For an investor in the highest tax bracket, it doesn’t make sense to invest in these as the net returns are comparable with that of the tax-free bonds.
  • NCDs are illiquid. If the interest rates fall, it may be difficult for investors to capitalise on falling interest rates. If you invest in govt bonds / short medium term debt funds, and if the interest fall in 2-3 years time frame, they may give you better returns than these NCD offering 12.5%.

Taxation Aspects

  • NCDs taken in the demat form will NOT attract any TDS on the interest income. However, if NCD are taken in physical form, TDS will be applicable if the interest amount exceeds Rs. 5,000 
Interest earned on NCD Taxable as per tax slab of Investor
If sold on exchange (before 12 months) Short term capital gain / loss –  Taxable as per tax slab of Investor
If sold on exchange (after 12 months) Long term capital gain / loss – Taxable @ 10.30% without indexation

 

How to Apply

  • Physical Form – You can download the Form and submit to designated bank branches alongwith cheque. SREI NCD Application Form Download
  • Online – You can invest online in DMAT form through your online share trading account or through your broker.

Summary

  • Investors in lower tax slab can consider investing in these NCD, but not more than 10% of their debt allocation.
  • Investors in the 30% tax bracket should invest in tax-free bonds or go for debt funds or FMPs.

 

 

Allotment Date   –

Listing date –

Check Allotment Status for this NCD

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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About wealth18

The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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