Introduction
SREI Infrastructure Finance is a festive Kolkata head-quartered has entered the debt capital market with a public issue of secured redeemable Non-Convertible Debentures (NCD) of face value Rs. 1,000 each to raise Rs. 100 crore with an preference to retain another Rs. 100 crore, taking the total fund raising to Rs. 200 crore.
Issue Details
SREI Infrastructure Finance issue opened on 26th August 2013 and will close on 17th September, with an option in SREI Infrastructure Finance hands to either close the issue earlier or extend the closing. Minimum application amount is Rs. 10,000, and in multiples of Rs, 1,000 afterward.
Rating
Unaffected from its earlier issue in April/May this year – ‘AA-’ by CARE and ‘AA’ by BRICKWORK indicating high degree of safety for timely servicing of financial compulsion.
Listing
To be listed on BSE with one NCD comprising a trading lot. NCD would be issued both in demat and physical (for individual investors) form.
Proffer of the Issue:
The NCD issue has five investment options for individuals/HUF and three for institutional and other investors, as below:
| Particulars | Series I | Series II | Series III | Series IV | Series V |
| Interest Payment | Annual | Cumulative | Monthly | Annual | Cumulative |
| Investor who can Apply | All | Only Individual/Huf | All | All | Only Individual/Huf |
| Tenure | 3 Years | 3 Years | 5 Years | 5 Years | 6 years 3 Months |
| Type of Security | Demat or Physical | Demat or Physical | Only Demat | Demat or Physical | Demat or Physical |
|
Coupon Rate {% pa} |
|||||
| Individual/Huf | 11.50% | NA | 11.16% | 11.75% | NA |
| Institutional Investors | 10.75% | NA | 10.35% | 10.85% | NA |
| Others | 10.90% | NA | 10.50% | 11.00% | NA |
|
Effective Yield {% pa} |
|||||
| Individual/Huf | 11.50% | 11.51% | 11.75% | 11.75% | 11.72% |
| Institutional Investors | 10.75% | NA | 10.85% | 10.85% | NA |
| Others | 10.90% | NA | 11.01% | 11.00% | NA |
|
Effective Yield {pa} |
|||||
| Individual/Huf | 11.50% | 11.51% | 11.75% | 11.75% | 11.72% |
| Institutional Investors | 10.75% | NA | 11.01% | 11.00% | NA |
| Others | 10.90% | NA | 11.01% | 11.00% | NA |
|
Redemption Amount {per NCD} |
|||||
| Individual/Huf | Rs. 1,000 | Rs. 1,387 | Rs. 1,000 | Rs. 1,000 | Rs. 2,000 |
| Others | Rs. 1,000 | NA | Rs. 1,000 | Rs. 1,000 | NA |
Company Background
The company provides financial products and services for infrastructure development and construction. For FY13, consolidated total income stood at Rs. 3,110 Crore with PAT of Rs. 263 crore and AUMs of Rs. 33,330 crore, as of 31st March 2013. On the other hand, its asset quality deteriorated sharply, with gross NPAs surging to 2.77% from 1.58% of 31st March 2012, and net NPAs nearly doubling to 2.30%, from 1.18% a year ago. Consequently, there is considerable stress on the company’s tome. For Q1FY14, company’s consolidated total income was Rs. 783 crore and PAT Rs. 47 crore.
Recommendation
The present Non-Convertible Debentures issue carries attractive returns transversely maturities, with yields of 11.50 percent to 11.75 percent for five years being the highest for folks. On the other hand, the SREI Infrastructure Finance is not the best placed in the sector witnessing tremendous stress and uncertainty. Comparison with SREI Infrastructure Finance preceding issue made earlier this year cannot be made as the liquidity is incredibly meager on Bombay Stock Exchange, with scarcely a duo of trades taking place in a calendar day and yields nearing 17 percent for the five year instrument.
Conclusion
For this reason, only those with a high risk appetite must go for the five year Non-Convertible Debentures – Series III or IV, preferably the latter which carries lower re-investment risk.
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