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NTPC Tax Free Bonds (Sept 2015) issue review

Published on Friday, September 18, 2015 by Dilip Davda

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NTPC Tax Free Bonds (Sept 2015) issue review

On one hand, secondary market is on a testing time with fresh bottom searching of recent times, on the other hand primary market in dilemma with poor listing of recent IPOs. Amidst such a scenario, debt offers are likely to steal the show for a while. We have debt offer from Muthoot Finance going on. But eagerly awaited Tax-Free Bonds is finally making a bee-line with NTPC offer. Details of NTPC Tax Free bonds are as under:

NTPC Ltd (NTPC) is a Government of India enterprise in thermal/renewal power generation and distribution segment. The company is coming out with its Tax Free Secured Redeemable Bonds issue that opens for subscription on 23.09.15 and will close on or before 30.09.15. Allotment for this offer will be made on first-come, first-serve basis in demat mode only. Bonds having face value of Rs. 1000 each is having tenure of 10 years, 15 years and 20 years and the total aggregate size of the offer is Rs. 700 crore (including oversubscription of Rs. 300 crore). Minimum application is to be made for 5 bonds and in multiple of 1 bond thereon, thereafter. Interest on these bonds will be paid on annual basis. Funds mobilized through this offer will be used for capital expenditure in solar power. Coupon rates are fixed at 7.11% (10 yrs), 7.28% (15 yrs) and 7.37% (20 yrs) for category I, II and III while category IV (i.e. retail investors) will get 7.36% (10 yrs), 7.53% (15 yrs) and 7.62% (20 yrs) tax free. Its debt equity ratio post this issue will remain same at 1.25.

NTPC has reserved 10% issue for QIBs (Category I), 25% for Corporate (Category II), 25% for HNIs (Category III) and 40% for Retail (Category IV). Retail investors can investment up to Rs. 10 lakh. Allotment will be made as under if there is any under subscription in any Portion (while other Portions are oversubscribed), priority in Allotments will be given in decreasing order of priority -Retail Individual Investor Portion; -High Net worth Individual Portion; - Corporate Portion; followed by QIB Portion.

In case of over-subscription, Allotments to the maximum extent possible, will be made on a first-come first- serve basis and thereafter on a proportionate basis in each Portion, determined based on the date of upload of each Application into the electronic system of the Stock Exchanges, meaning full Allotment of Bonds to the Applicants on a first-come-first-serve basis up to the date falling one day prior to the date of over-subscription and proportionate Allotment of Bonds to the Applicants on the date of oversubscription.

This issue is rated by ICRA as "AAA (Stable)", by CRISIL as "AAA" and by CARE as "AAA" indicating at the highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk.

On performance front, the company has been able to post rise in top line for past three fiscals, but bottom line has been on declining mode. Pressure on margins is attributed to stress on infra developments witnessed and in line with general trends. Its depreciation provisions and finance costs have gone up gradually for past three fiscals. Its consolidated turnover has improved from Rs. 75282.23 crore in FY13 to Rs. 82700.95 crore in FY15, but its net profit has declined from Rs. 12590.78 crore in FY13 to Rs. 9986.34 crore in FY15. Depreciation is up from Rs. 3823.22 crore to Rs. 5564.61 crore and Finance Cost is up form Rs. 2480.54 crore to Rs. 3570.37 crore for the said years.

Issue is lead managed by A K Capital Services Ltd, Axis Capital Services Ltd, Edelweiss Financial Services Ltd, SBI Capital Markets Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. IDBI Trusteeship Services Ltd is the Bonds Trustee.

Remarks: As market is expecting rate cut in near term, this offer is considered to be the safe and most attractive one. Grab it.

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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


33 Comments

bk
33. bk  Oct 16, 2015 09:02 Reply
When will bonds get credited to demat?
NIRMAL BHATT
32. NIRMAL BHATT  Oct 7, 2015 16:51 Reply
REFUND CREDITED
mukesh
31. mukesh  Oct 7, 2015 13:55 Reply
refund still not credited to bank account. Anybody received refund in bank account
imdevu
30. imdevu  Oct 7, 2015 13:32 Reply
it seems all people who applied on Day 1 got it. My friend who applied on day 2 got all the money refunded.
Gani
29. Gani  Oct 6, 2015 22:50 Reply
Looks like all retail investors got allotment for 15-16% of application amount. Its not first come basis.
Aris
28. Aris  Oct 6, 2015 22:39 Reply
No refund yet
Aris
27. Aris  Oct 6, 2015 22:30 Reply
applied for 290000 and allotted 45000
Ashu
26. Ashu  Oct 6, 2015 19:38 Reply
Applied for Rs.100,000 ... got for Rs.16,000
mukesh
25. mukesh  Oct 6, 2015 17:27 Reply
when refund amount will be credited to savings account. any view. Anybody received refund in the account
kalpesh
24. kalpesh  Oct 6, 2015 17:24 Reply
Got allotment mail. Can we expect some premium on listing.
mukesh
23. mukesh  Oct 6, 2015 17:23 Reply
refund not recevied nor allotment applied offline.
anand
22. anand  Oct 6, 2015 16:57 Reply
Applied for 340 bonds, alloted 53
Janix
21. Janix  Oct 6, 2015 16:11 Reply
ASBA
Gaurav
20. Gaurav  Oct 6, 2015 15:38 Reply
I have applied through www.icicidirect.com (NON-ASBA) and have not yet got either refund or bonds.
Raj
19. Raj  Oct 6, 2015 15:17 Reply
Has anyone who applied non asba got refund??
ananad
18. ananad  Oct 6, 2015 14:25 Reply
Janix u got a refund or asba??
SHASHANK K S
17. SHASHANK K S  Oct 6, 2015 13:55 Reply
Amount debited from ASBA. Applied for 50k only 10k allotted
Janix
16. Janix  Oct 6, 2015 12:43 Reply
Amount debited. Apllied for Rs3L, alotted Rs 31,000
Janix
15. Janix  Oct 5, 2015 22:14 Reply
No status on allotment and/or refund so far
anand
14. anand  Oct 5, 2015 17:27 Reply
Has anyone got allotment/refund??
kalpesh
13. kalpesh  Oct 5, 2015 09:49 Reply
NTPC there seems to be old bond... (Karvy)
SOF
12. SOF  Oct 4, 2015 23:08 Reply
I can see allotment here,

http://karisma.karvy.com/investor/jsp/IDFC-APP.jsp

but captcha not working
Anand
11. Anand  Oct 4, 2015 13:31 Reply
Hi , many people asked this , when is NTPC tax free bonds allotment& refund expected ?

No news on Karvy on basis of allotment or allotment , neither on any news media or social media

Relly hope refund happens tomorrow to apply for PFC tax free bonds on Day 1
s.k.
10. s.k.  Oct 2, 2015 15:13 Reply
Will refunds of NTPC TFB''s be received by 5.10.2015 to enable Applications for PFC TFB''s?
peegee
9. peegee  Oct 1, 2015 18:43 Reply
Can We sell this tax free bond in market ???
janardan panday
8. janardan panday  Oct 1, 2015 11:13 Reply
What is the expected date of allotment and refund in case of un allotted portion?
Gaurav Halwasia
7. Gaurav Halwasia  Sep 26, 2015 19:58 Reply
Do we know what is the final subscription figures/numbers of this issue and how the allotment will happen in retail category.
Dilip Davda
6. Dilip Davda  Sep 25, 2015 12:26 Reply
This tax free bonds means your interest income is totally tax free. You do not get any rebate on investment in such bonds. Thus an interest rate of around 7.5% on such bonds means interest income under taxable scenario of around 10.7%. If one consider interest rate that are prevalent, then you get 9 to 10% on FDs that is taxable and the net in one''s hand (post 30% IT slab) comes to 7% or lower.
ashii
5. ashii  Sep 24, 2015 13:51 Reply
over 11 times subscribed on day and pre closed!
any idea how allotment filter will happen?
is it 1st come basis?

when allotment expected?
ROOPESH
4. ROOPESH  Sep 24, 2015 08:19 Reply
NO IT IS NOT APPROVED INVESTMENT UNDER SECTION 80 C OF INSURANCE ACT.HENCE YOU CANNOT CLAIM TAX EXEMPTION.
CPPK
3. CPPK  Sep 23, 2015 13:57 Reply
CAN BE GET TAX REBATE UNDER 80 C AFTER 1 LAC
JAYANT
2. JAYANT  Sep 20, 2015 09:06 Reply
NY CAPITAL GAIN EXPECTED
RAHUL GOYAL
1. RAHUL GOYAL  Sep 19, 2015 11:40 Reply
Any premium on bond



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