tata capital financial services NCD

Tata Capital Financial Services NCD issue plans to raise  ₹ 7,500 crore in through issue of non-convertible debentures (NCDs). The Tata Finance NCD  issue nvolves raising ₹2,000 crore through the issue of three, five and 10-year paper, while the company can retain oversubscriptions of ₹5,500 crore more. Tata Capital Financial Services Limited (“Company” or “TCFSL”) is a wholly owned subsidiary of Tata Capital Limited (“TCL”) and is a Systemically Important Non Deposit Accepting Non Banking Finance Company

The Tata Capital NCD (Tata Capital Financial Services NCD) is offering a coupon rate of between 8.80% and 9.10% for Retail investors on different tenors ( 3, 5,10 years). Tata Capital Financial Services will issue secured, redeemable NCDS up to Rs 6000 crore and unsecured, subordinated, redeemable, NCD up to Rs 1500 crore, thus in total  aggregating to Rs 7500 crore.

Issue Summary/Highlights:
  • Issue shall open from Mon, 10 /09/2018 to Fri, 21/09/2018
  • The TCFSL NCD issue consists of Secured Redeemable and unsecured,Non-Convertible Debentures
  • For Retail investors the annual interest rate varies from 8.9% to 9.1% deepening on the tenor i.e.  ( 3, 5, 10 years)
  • Tata Capital NCD Base Issue size is Rs.2,000 Crore with an option to retain oversubscription up to Rs.5,500 Crore aggregating up to Rs.7,500 crores.
  • Minimum Rs.10,000/- ( 10 NCDs) collectively across one or  all the Options and in multiple of Rs.1,000 (1 NCD) thereafter. 
  • Allotment is only in Demat mode and is on first come first basis.
  • The NCDs have been rated “CRISIL AAA / Stable” by CRISIL as well as by  CARE Ratings Limited. which ndicate highest degree of safety regarding timely servicing of financial obligations.
  • This is reasonable opportunity for those looking towards  fixed income as besides highest rating, these NCDs  come from a Tata Group company.
  • Application can be made in ASBA or non-ASBA mode. Cheque in favour of: ”TCFSL NCD Escrow Account”. (please Check application form also)
Subscription : Tata Capital NCD

18/09/18
Closed
CategoryBase Size(Rs. Cr)With Green Shoe (Rs. Cr)x on base Sizex on Total Size
QIB40015000.10.03
NII40015000.290.08
HNI60022502.260.60
Retail60022503.290.88
Total200075001.740.46

About Tata Capital Limited:
  • Tata Capital Financial Services Limited (“TCFSL”) is asubsidiary of Tata Sons Limited
  • Tata Capital Financial Services Limited is registered with the Reserve Bank of India as a Systemically Important Non  Deposit Accepting Non Banking Financial Company (NBFC)
  • Tata Capital Financial Services Limited is a one-stop financial services provider catering to the diverse needs of retail, corporate and institutional customers through a range of offerings, directly or through its subsidiaries. 
  • Tata Capital Financial Services Limited also has presence in the overseas markets with registered offices of its subsidiaries in Singapore and London. 
  • The company clocked a post tax net of ₹483 crore for fiscal year 2017-18, and was also able to get down the gross non-performing assets ratio to 3.32%, from the 4.94% in the year-ago period.
Tata Capital NCD issue Structure

Shriram Transport Finance NCD issue is structured into following categories of Investors: 
Category I – QIBs– 20% of issue; Rs. 1500 crore
Category II – Non-Institutional Investors – 20% of issue; Rs.  1500 crore
Category III – HNIs i.e. above Rs. 10 lakhs – 30% of issue; Rs. 2250 crore
Category IV –Individuals including HUFs – 30% of issue; Rs. 2250 crore


Particulars/ OptionIIIIII
Frequency AnnualAnnualAnnual
Tenor3 Years3 Years5 Years
Coupon (Catg 1 & II)8.70%8.80%9.00%
Coupon (Catg III & Iv)8.80%8.90%9.10%
Face ValueRs.1,000Rs.1,000Rs.1,000

  • Rs. 10,000 is the minimum amount to invest in this issue.
  • The NCDs proposed to be issued under this Issue have been rated “CRISIL AAA / Stable” by CRISIL as well as by  CARE Ratings Limited. This ratings of the NCDs indicate highest degree of safety regarding timely servicing of financial obligations.
  • There are different interest rate for different investor Categories. There is only annual interest option in all NCDs tenures i.e. 3 year, 5 year and 10 Year NCDs. 
  • The NCDs are Secured in nature.
  • 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 Tata Capital  NCD issue comes from a company with a good back background and  backing of TATA group. In the past Tata Capital Financial Services Limited faced enhanced levels of NPAs due to exposure to Infrastructure projects. This has now been truncated and adequate safety is reflect in AAA rating by both  CARE  and CRISIL.
  • I do not intend to apply in TATA Finance NCD (Tata Capital Financial Services NCD) as I normally buy NCDs from secondary markets and may buy the three year annual 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 for 3 years  as interest rates could harden over the long run.
  • Tata Capital NCD (TCFSL NCD) is expected to trade regularly in market. In general  the spread  in NCDs is more as the Debt market is yet not fully developed in the country.
  • Since allotment is on first come first serve basis,  So those who desire to apply should do so on first day itself.
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.