M Financial Credit NCD
JM Financial Credit Solutions Limited NCD Tranche II, Nov 18 (JM Financial Credit Solutions NCD) issue will be raising up to ₹1250 crore by issuing secured non-convertible debentures (NCDs). The NCD issue has   a base issue size of ₹250 crore with an option to retain oversubscription up to ₹1000 crore, aggregating up to ₹1250 crore (tranche II issue). JM Financial Credit NCD comes for the  NBFC arm of the JM Financial Group
The JM Financial Credit NCD issue is offered in six options and  carry tenors ranging from 38 months to 120 months. For Retail investors cthe public NCD issue offers attractive interest rate in the range of range of 9.67% to 10.25%, rwhich translates to  effective yield of 10% to 10.25% for the investors.

Security TypeSecured Redeemable non-convertible Debentures
SeriesI-VI
Issue Period20 Nov 2018 to 20 Dec 2018
Minimum Bid QuantityRs. 10000
Issue Size Base Issue size Of Rs. 2,500 Million with an option to retain oversubscription upto Rs 10,000 Million aggregating upto Rs. 12,500 Million (“Tranche II Issue”) 
Ratings“[ICRA] AA/Stable” (ICRA Double A/ Stable) by ICRA and “IND AA/Stable” (IND Double A /Stable)” by India Ratings
BRLMA.K. CAPITAL SERVICES LTD, JM Financial Limited, Edelweiss Financial Services Limited, 4) Trust Investment Advisors Pvt. Ltd
RegistrarKarvy Computershare Private Limited
About JM Financial Credit Solutions Limited:

JM Financial Credit Solutions Limited is  is a Systemically Important Non-Deposit taking Non-Banking Financial Company (NBFC-ND-SI). The company was jointly promoted by the JM Financial Group, a leading diversified financial services provider in the country, and INH Mauritius 1 Fund (INH Global), a global fund led by Mr. Vikram Pandit, ex-CEO of Citigroup. JM Financial Limited (JMFL, rated [ICRA]AA (stable)), the holding company of the JM Financial Group, holds 50.01% equity stake in the company as on December 31, 2017 while the balance is held by the INH Mauritius 1 Fund and other. The company is engaged in wholesale lending, largely catering to the real estate sector, and had a loan book of Rs. 7,339 crore as on March 31, 2018 (vis-a-vis Rs. 5,658 crore as on March 31, 2017). For the financial year ending March 31, 2018, JMFCSL reported a net profit of Rs. 328 crore on a total income of Rs. 960 crore as compared to a net profit of Rs. 277 crore on a total income of Rs. 788 crore for the financial year ending March 31, 2017.

It is a relatively new company with a strong promoter backing of JM Finance Group. JM Financial group has interests in investment banking, retail and institutional equity broking, wealth management, investment advisory services, portfolio management, asset management, commodity broking, securities-based lending, corporate lending, commercial real estate lending, private equity, and asset reconstruction. 
As of March 31, the company, which has been focusing on real estate project financing, had a lending book size of about 7,339 crore.

JM Financial Credit NCD issue Structure

JM Financial Credit NCD issue is structured into following categories of Investors: 
Category I – QIBs– 10% of issue
Category II – Non-Institutional Investors – 10% of issue
Category III – HNIs i.e. above Rs. 10 lakhs –40% of issue
Category IV – Retail  Investors, including HUFs – 40% of issue

Options for Retail:  
SeriesTenorFrequencyCouponEff YieldRedemption
Amount
I42 MonthsAnnual10.00%10.00%1000
II42 MonthsCumulative9.60% 1396
III60 MonthsAnnual10.10%10.46%1000
IV60 MonthsMonthly9.67%10.11%1000
V120 MonthsAnnual10.25%10.25%1000
VI120 MonthsMonthly9.81%10.26%1000

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.
  • JM Financial Credit NCD comes at a time when NBFC are under considerable pressure.
  • A recent issue of Manappuram NCD is still struggling for funds and is open. 
  • My preference is for short term NCD listed in the markets for companies like Manappuram Finance, Muthoot  Finace, Shriram Group etc.
  • I donot intend to apply in JM Financial Credit NCD issue
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.