Shriram Transport Finance NCD
Shriram Transport Finance NCD issue (June 2018)  intends to raise Rs 5,000 crore via issue of secured redeemable non-convertible debentures (NCDs). The public issue will open on 27 June and closes 20 July with an an option of early closure. 

The Shriram Transport Finance NCD issue is offered in seven options and  carry tenors ranging from 3 years to 10 years with annualized yields varying from 9.2% to 9.5%. There is additional incentive of 0.10% p.a for the individual investors across all series. Further, Senior Citizens only initial allottees) are entitled to additional incentive of 0.25% per annum across all series i.e total 0.35%.

T
he funds raised through this issue will be used for onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company and for general corporate purposes.
Shriram Transport Finance NCD issue:
Tenor Interest PaymentCoupon RateEffective Yield Redemption Amount 
3 yearsAnnual9.20%9.20%1000
3 YearsCumulativeN.A.9.20%1302.49
5 YearsMonthly9.03%9.41%1000
5 YearsAnnual9.40%9.40%1000
5 YearsCumulativeN.A.9.40%1567.45
10 YearsMonthly9.13%9.51%1000
10 yearsAnnual9.50%9.50%1000
About Shriram Transport Finance:

Shriram Transport Finance  is part of “SHRIRAM” conglomerate which has significant presence in financial services viz., commercial vehicle financing business, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products such as life and general insurance products and units of mutual funds. The Company was incorporated in the year 1979 and is registered as a Deposit taking NBFC with Reserve Bank of India under section 45IA of the Reserve Bank of India Act ,1934.
Shriram Transport Finance Company Ltd is among the leading NBFCs for the commercial vehicle industry and one of the largest asset financing non-banking finance companies in the organized sector. The company caters to first-time buyers, small road transport operators for financing pre-owned commercial vehicles.and also provides commercial vehicle finance for new commercial vehicles. 

Shriram Transport Finance NCD issue Structure

Shriram Transport Finance NCD issue is structured into following categories of Investors: 
Category I – QIBs– 10% of issue; Rs. 500 crore
Category II – Non-Institutional Investors – 10% of issue; Rs.  500 crore
Category III – HNIs i.e. above Rs. 10 lakhs – 40% of issue; Rs. 2000 crore
Category IV –Individuals including HUFs – 40% of issue; Rs. 2000 crore

  • Rs. 10,000 is the minimum amount to invest in this issue.
  • Monthly option is not available for 3 year  period.
  • CRISIL and India Ratings have rated this issue as ‘AA+’ with a ‘Stable’ outlook
  • Additional incentive of 0.10% p.a for the individual investors across all series. Further, Senior Citizens (initial allottees) are entitled to additional incentive of 0.25% per annum across all series i.e 0.35%.
  • The NCDs are Secured in nature.
  • Available in Demat Form only.
  • Listing at BSE only. 
  • Allotment will be made on a first-come first-served basis.
Assessment:

  • NCDs are taxable, thus the return get reduced by individual’s Tax bracket. 
  • TDS is not deducted if NCDs are held in Demat form.
  • The Shriram Transport Finance NCD issue comes from a company with very rich and strong background.
  • Shriram Transport Finance has a unblemished record of serving Fixed deposit holders as well as NCD holder for  more than three decades and thus  is quite trust worthy.
  • I do not intend to apply in Shriram Transport Finance  NCD issue as I normally buy NCDs from secondary markets. However deals in secondary markets are less with other complications, rates are not very different and this issue is reasonable opportunity for those looking towards  fixed income portfolio.
  • My preference is 36 month option as interest rates could harden over the long run. Those in need of regular money can invest in 5 year monthly plan as well. In general annual options are traded more frequently in market.
  • The allotment is on first come first basis.
Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

2 thoughts on “Shriram Transport Finance NCD Review – 9.5% June 2018

  1. dear sir,

    many thanks for your valuable research and analysis. i would like to know that should i invest in icici pru bharat consumption fund series 3 nfo or essel multicap nfo?

    looking for your early reply as always.

    thanks

    k p c

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