ECL Finance NCD
ECL Finance NCD issue (July 2018)  intends to raise Rs. 2,000 crore including a green-shoe option of Rs. 1,500 crore via issue of secured redeemable non-convertible debentures (NCDs). The NCD issue shall be open from Tuesday, 24th July 2018 to Thursday, 16th August 2018

The ECL Finance issue is offered in seven options and  carry tenors  3 years, 5 years and 10 years. These NCDs carry coupon rates in the range of 9.25% to 9.85% with monthly, annual and cumulative interest payment options.
ECL Finance NCD issue:
About ECL Finance:

ECL Finance Limited is  one of the finance arms of the Edelweiss Group and is a leading non-deposit taking NBFC that offers a wide range of corporate and retail loan products. The company’s product portfolio includes:

1. Structured Collateralised Credit
2. Wholesale Mortgages
3. SMEs and others
4. Loans against securities
5. Retail Mortgages
6. Agri Credi

ECL Finance NCD issue Structure

Shriram Transport Finance NCD issue is structured into following categories of Investors: 
Category I – QIBs– 20% of issue; Rs. 400 crore
Category II – Non-Institutional Investors – 20% of issue; Rs.  400 crore
Category III – HNIs i.e. above Rs. 10 lakhs – 30% of issue; Rs. 600 crore
Category IV –Individuals including HUFs – 30% of issue; Rs.600 crore

OptionFrequency TenorCouponEff  Yield Maturity Amount
ICumulative3 YearsNA9.45%Rs.1,311.30
IIAnnual3 Years9.45%9.45%Rs.1,000
IIIMonthly5 Years9.25%9.65%Rs.1,000
IVCumulative5 YearsNA9.65%Rs.1,585.30
VAnnual5 Years9.65%9.65%Rs.1,000
VIMonthly10 Years9.43%9.85%Rs.1,000
VIIAnnual10 Years9.85%9.85%Rs.1,000
VIIIAnnual3 YearsMIBOR+2.5%MIBOR+2.5%Rs.1,000
  • Rs. 10,000 is the minimum amount to invest in this issue.
  • Monthly option is not available for 3 year period.
  • This issue is graded as CRISIL AA and ICRA AA (Stable), indicating a high degree of safety regarding timely servicing of financial obligations.
  • Same coupon  rate for all investor Categories.
  • The NCDs are Secured in nature.
  • Available in both Physical &  Demat Form. However, only  the investment made via the demat route shall not attract TDS .
  • Listing at BSE and NSE.
  • 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 ECL Finance NCD issue comes from a company with a good back background, backing of Edelweiss group and earlier NCDs issued by  the company are traded regularly on the exchanges. 
  • I do not intend to apply in ECL Finance NCD issue as I normally buy NCDs from secondary markets and may buy the three year annual/cumulative option if listed at a discount. 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.