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NHAI Tax Free Bonds offer review Dec 2015

Published on Saturday, December 12, 2015 by Dilip Davda

NHAI Tax Free Bonds offer review Dec 2015

In last two months we marked four Tax Free offers that received overwhelming response as HNIs prefer to park their money for long term tax free gains in the wake of cooling down in interest rates going forward. Last offer from IRFC got over Rs. 10800 crore against aggregate offer size of Rs. 4532 crore.

This week we have tax free bonds offer from National Highway Authorities of India (NHAI) that is planning to mobilize Rs. 1000 crore via issuance of tax free secured redeemable non-convertible bonds. With an option to retain oversubscription to the tune of Rs. 9000 crore the aggregate offer size is Rs. 10000 crore. These bonds have face value of Rs. 1000 each and minimum application is to be made for 5 bonds and in multiple of 1 bond thereon, thereafter. It has tenure of 10 years and 15 years only with a coupon rate of 7.14% and 7.34% for category I,II and III(non-retails), 7.39% and 7.60% for category IV i.e. retail investors for the said tenures. Funds mobilized with this issue will be used in funding the various model highway projects. NHAI will pay 5% interest on refund money, if any.

Allotment is available in demet as well as in physical mode, however, trading will take place only in demat mode. Issue opens for subscription on 17.12.15 and will close on or before 31.12.15. Issue is managed by SBI Capital Markets Ltd, A K Capital Services Ltd, Axis Capital Ltd, Edelweiss Financial Services Ltd and ICICI Securities Ltd. SBICAP Trustee Co. Ltd is the Trustee for bond holders and Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, these bonds will be listed on BSE and NSE.

These bonds are graded as IND AAA by IRRPL, CARE AAA by CARE, ICRA AAA by ICRA and CRISIL AAA/Stable by CRISL indicating highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

Company has suffered a setback due to slowdown in infra projects related to roads. But as we are now seeing major investment lined up for road infra developments, this company will regain its lost glory once again. As its debt-equity ratio is at a comfort level, it can raise the necessary funds to speed up the developments.

Conclusion: As the interest rates are set to cool down going forward, this offer with above 7% tax free returns worth considering.

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. 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.

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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



21 Comments

21. navneet   I Like It. | Report Abuse |   Link | Jan 18, 2016 3:37:13 PM Reply
Can some one help me understand why same Bond different category have such drastically different rates.
Retail one at 7.39% rate is at 1000 but regular one at 7.14 is at 1100 Rs , please help me with some logic and reasoning.
21.1. Kesar   I Like It. | Report Abuse |   Link | Jan 19, 2016 8:02:18 PM
Price differentail is due to demand and supply issue. Newly issued bonds always have a higher supply as many people invest for resale only. It will take few months before this excessive supply is bought over.
20. AMAN   I Like It. | Report Abuse |   Link | Jan 14, 2016 11:08:41 AM Reply
isin for listed bonds..
7.14 INE906B07EG4
7.39 INE906B07EH2
7.35 INE906B07EI0
7.60 INE906B07EJ8
19. jp   I Like It. | Report Abuse |   Link | Jan 14, 2016 11:04:52 AM Reply
i got 999 bonds of 7.39% (category 4 ,10 yrs) in my demat ac but not received any interest . has anybody received interest in bank ac and whats is int per bond if received...thanks
19.1. aman   I Like It. | Report Abuse |   Link | Jan 14, 2016 11:10:31 AM
i also didnt recieved int..
19.2. motabhai   I Like It. | Report Abuse |   Link | Jan 14, 2016 12:05:48 PM
I HV RECEIVED INTEREST Rs.729.00 against application of 500 bonds of 7.6
18. motabhai   I Like It. | Report Abuse |   Link | Jan 14, 2016 10:19:10 AM Reply
kya price chal raha h??? NHAI?
18.1. motabhai   I Like It. | Report Abuse |   Link | Jan 14, 2016 10:42:33 AM
1001 day''s low and 1006.45 day''s high
17. taro baap   I Like It. | Report Abuse |   Link | Jan 13, 2016 5:18:46 PM Reply
Guys the listing is tomorrow.... Best of luck....
16. Pankaj   I Like It. | Report Abuse |   Link | Jan 13, 2016 5:54:37 AM Reply
Does ASBA applicants also receive interest for the application period
15. Taro baap   I Like It. | Report Abuse |   Link | Jan 12, 2016 9:42:44 PM Reply
Allotment out on karvy ... Please check...
14. Kesar   I Like It. | Report Abuse |   Link | Jan 12, 2016 7:58:12 AM Reply
Full allotment got credited to demat account today with allotment date as 11/1/2016. Listing expected on 14/15 jan. After bumber response to NHAI & IRDEA issues, likely listing price 1030 for 7.60%. Enjoy!!
14.1. janardan panday   I Like It. | Report Abuse |   Link | Jan 12, 2016 1:59:34 PM
Ireceived SMS for the allotement from VM-NSDLDP at 08.27 that"287 bonds of NHAI 7.39% BONDS SERIES 1B credited to your Demat A/C ..........on 11/01/16 in respect of public offer NSDL" but it is not visible there.What to do please suggest
14.2. Kesar   I Like It. | Report Abuse |   Link | Jan 12, 2016 8:07:57 PM
Will be visible tomorrow. Interst on application also credited. Listing on 14/1/16 @ 1030!!
13. Jp   I Like It. | Report Abuse |   Link | Jan 11, 2016 3:36:33 PM Reply
Applied 999 got 999
13.1. taro baap   I Like It. | Report Abuse |   Link | Jan 11, 2016 5:34:15 PM
On which site is available....
13.2. VJ   I Like It. | Report Abuse |   Link | Jan 11, 2016 5:40:44 PM
Where to check for the allotment status
12. D C APTE   I Like It. | Report Abuse |   Link | Jan 11, 2016 12:23:48 PM Reply
APPLIED FOR 1000 GOT 1OOO.
11. taro baap   I Like It. | Report Abuse |   Link | Jan 11, 2016 11:23:24 AM Reply
allotment to be declared by tonight... 12 days getting over so...
10. Smit   I Like It. | Report Abuse |   Link | Jan 11, 2016 11:16:51 AM Reply
Applied for 1000 Bond under retail category & same has been alloted. Debited to my ASBA account
9. Anand   I Like It. | Report Abuse |   Link | Jan 7, 2016 10:08:16 AM Reply
Dont expect any gain on listing like IRFC as the issue size is huge, will trade at par only
9.1. CB DHARIWAL   I Like It. | Report Abuse |   Link | Jan 9, 2016 10:50:17 AM
कब अलोटमेंट है ?
लिस्टिंग कब है ?
कितने प्रॉफिट की उम्मीद रखे ?

कोई मार्गदर्शन ????
9.2. Anand   I Like It. | Report Abuse |   Link | Jan 11, 2016 10:09:16 AM
Koi profit ki umeed mat karna
listing this week
8. Amit   I Like It. | Report Abuse |   Link | Jan 3, 2016 12:04:28 PM Reply
NHAI KA ALLOTMENT HO GAYA KYA....KIS SITE PR HE
7. vinod   I Like It. | Report Abuse |   Link | Jan 1, 2016 10:33:25 AM Reply
Listing kab he
6. vinod   I Like It. | Report Abuse |   Link | Jan 1, 2016 10:32:52 AM Reply
Listing kab he
5. Smit   I Like It. | Report Abuse |   Link | Jan 1, 2016 10:24:16 AM Reply
As stated by Anand Retail portion not fully subscribed hence we may expect 100% allotment under retail segment (cat iv)
4. NITESH SAHIJANI   I Like It. | Report Abuse |   Link | Dec 31, 2015 8:55:44 PM Reply
Kitna bharna gaya
4.1. Anand   I Like It. | Report Abuse |   Link | Jan 1, 2016 8:17:57 AM
Retail portion is undersubscribed, so expect 100% allotment to all. But no listing gains like IRFC
3. SHAMBHU   I Like It. | Report Abuse |   Link | Dec 31, 2015 1:40:08 PM Reply
KITNA SUBSCRIBED HUA?? AS ON 30/12/2015
2. nitesh   I Like It. | Report Abuse |   Link | Dec 22, 2015 10:52:32 PM Reply
Kitna subscribe hua ?
1. Devendra   I Like It. | Report Abuse |   Link | Dec 22, 2015 10:31:57 AM Reply
100% allotment for the people who applied on the first day.