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Tata Capital Financial NCD Offer review - Sept 2018

Published on Sunday, September 2, 2018 by Dilip Davda

Tata Capital Financial NCD Offer review - Sept 2018
  • Debt offer from an investor friendly Tata group
  • Attractive coupon rates with good rating of AAA-Stable by CRISIL and CARE
  • Allotment will be on "First Come – First Served" basis.
  • Allotment will be in demat mode only.
  • Listing will be on BSE/NSE.

ABOUT COMPANY:

Tata Capital Financial Services Ltd. (TCFSL) is a Tata group company and a demerged part of Tata Captal Ltd. which is under the fold of Tata Sons Ltd. It is a Systemically Important Non – Deposit taking Non – Banking Financial Company ("ND – SI – NBFC") focusing on providing a broad suite of financing products customized to cater the needs of various segments. TCFSL is engaged in business of corporate financing, consumer financing, rural financing and marketing of White Label Tata Card. The company has a robust marketing and distribution network which provides customers a diversified financial services platform with presence in 23 states through 134 offices as on June 30, 2018.

ISSUE DETAILS:

TCFSL is coming out with a maiden debt offer of NCDs with a base size of Rs. 2000 crore and has a shelf limit of Rs. 7500 cr. including unsecured NCDs of Rs. 1500 cr. Funds mobilized through this debt offer shall be utilized for the purpose of onward lending, financing, and for repayment /prepayment of interest and principal of existing borrowings of TCFSL (upto 75%) and the rest as general corpus fund.

Company is offering NCDs with a face value of Rs 1000. These NCDs will have tenures of 3 years, 5 years and 10 years, with interest rates in the range of 8.7-9.10%. The company plans to pay 10 basis points more to retail and HNI investors. Of the total issue size, 30% will be reserved for retail investors, who can invest up to Rs 10 lakhs. Unsecured NCDs are for 10 years tenure (having interest rate of 9% for QIBs and 9.10% for HNIs and Retail category). Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Allotment will be in demat mode only. Allotment will be made on "First come – First Served" basis. Issue opens for subscription on 10.09.18 and will close on or before 21.09.18. Post allotment, it will be listed on BSE and NSE.

LEAD MANAGERS/REGISTRAR/DEBENTURE TRUSTEE:

Issue is jointly lead managed by Edelweiss Financial Services Ltd., A K Capital Services Ltd. and Axis Bank Ltd. Karvy Computershare Pvt. Ltd. is the registrar to the issue Vistra ITCL (India) Ltd. is the Debenture Trustee. Post issue TCFSL’s debt-equity ratio will stand enhaced to 8.30 from current 6.73.

RATING OF THE ISSUE:

This issue is rated CRISIL/AAA-Stable by CRISIL and CARE/AAA-Stable by CARE. The ratings of the NCDs indicate highest degree of safety regarding timely servicing of financial obligations.

FINANCIAL PERFORMANCE:

TCFSL’s total income and profit after tax as of March 31, 2018 stood at Rs. 4555.37 cr. and Rs. 482.58 cr. respectively. Its income from operations witnessed a CAGR of 13.11% from Rs. 2783.13 cr. in Fiscal 2014 to Rs. 4555.37 cr. in Fiscal 2018 and profit after tax witnessed a CAGR of 29.40% from Rs. 172.13 cr. to Rs. 482.58 cr. for the said periods. The loan and advances outstanding of the Company has witnessed a CAGR of 14.01% from Rs. 21851.08 cr. in Fiscal 2014 to Rs. 36913.24 cr. in Fiscal 2018.

Company’s total loan and advances outstanding was Rs. 36913.24 cr. as of March 31, 2018, out of which, secured loans constituted 59.30% of the Company's total loan and advances outstanding as at March 31, 2018. TCFSL’s CRAR, as of March 31, 2018 computed on the basis of applicable RBI requirements was 16.68% compared to the RBI stipulated minimum requirement of 15% as per the Prudential Norms of RBI. Its gross NPAs and net NPAs as a percentage of total loan and advances outstanding was 3.32% and 0.90%, respectively as of March 31, 2018.

CONCLUSION:

Good Rating, well known investor friendly Tata group and lucrative coupon rates make this offer a worthy option for investors looking for long term fixed income. Investment in this debt offer may be considered for medium to long term.(Subscribe)

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About Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com


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