PFC Tax Free Bonds October 2015 review

Published on Friday, September 25, 2015 by Dilip Davda

PFC Tax Free Bonds October 2015 review

Power Finance Corporation Ltd (popularly known as PFC) is a leading financial institution in India focused on the power sector. PFC plays a strategic role in the GoI’s initiatives for the development of the power sector in India. The company works closely with GoI state Governments and power sector utilities, other power sector intermediaries and private sector clients for the development and implementation of policies and structural and procedural reforms for the power sector in India. In addition, it is involved in various GoI programs for the power sector, including acting as the nodal agency for the UMPP program and the IPDS/R-APDRP and as a bid process coordinator through its wholly owned subsidiary PFC Consulting Limited for the ITP scheme. It provides a comprehensive range of financial products and related advisory and other services from project conceptualization to the post-commissioning stage to its clients in the power sector, including for generation (conventional and renewable), transmission and distribution projects as well as for related renovation and modernization projects. PFC provides various fund based financial assistance, including long-term project finance, short-term loans, buyer's line of credit, underwriting of debt and debt refinancing schemes as well as non-fund based assistance including default payment guarantees, credit enhancement guarantees and letters of comfort. The company also provides various fee-based technical advisory and consultancy services for power sector projects through its wholly owned subsidiary PFC Consulting Ltd. It has also expanded its focus areas to include projects that represent forward and backward linkages to the core power sector projects, including procurement of capital equipment for the power sector, fuel sources for power generation projects and related infrastructure development. It also funds power trading initiatives.

The company is coming out with its Tax Free Secured Redeemable Bonds issue of Rs. 100 crore that opens for subscription on 05.10.15 and will close on or before 09.10.15. It has permission to retain oversubscription up to Rs. 600 crore for an aggregate size of the offer of Rs. 700 crore. Allotment for this offer will be made on first-come, first-serve basis in physical or demat mode, however trading will take place in demat mode only. Bonds having face value of Rs. 1000 each is having tenure of 10 years, 15 years and 20 years. 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), 7.27% (15 yrs) and 7.35% (20 yrs) for category I, II and III while category IV (i.e. retail investors) will get 7.36% (10 yrs), 7.52% (15 yrs) and 7.60% (20 yrs) tax free. Its debt equity ratio post this issue will be 5.51 against 5.49. The funds raised through this Issue will be utilized towards on-lending to infrastructure projects. Such utilization of Issue Proceeds shall be in compliance with various guidelines/regulations/ clarifications issued by RBI, SEBI or any other statutory authority from time to time.

PFC 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.

This issue is rated by ICRA as “AAA”, by CRISIL as “AAA/Stable” 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 and bottom lines for past three fiscals. Its consolidated turnover has improved from Rs. 17135.90 crore in FY13 to Rs. 24952.88 crore in FY15, and net profit has increased from Rs. 4437.74 crore in FY13 to Rs. 6004.40 crore in FY15.

Issue is lead managed by Edelweiss Financial Services Ltd, A K Capital Services Ltd; RR Investors Capital Services Pvt. Ltd. Karvy Investor Services Ltd. Bigshare Services Pvt Ltd is the registrar to the issue. Milestone Trusteeship Services Pvt. Ltd is the Bonds Trustee. Post allotment, these bonds will be listed on BSE.

Remarks: Its coupon rates are a bit lower than last TFB issue by NTPC. 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


19. anand   I Like It. |Report Abuse|  Link|Oct 20, 2015 11:57:52 AMReply
Got cr in demat
14% allotment
18. anand   I Like It. |Report Abuse|  Link|Oct 19, 2015 9:20:54 PMReply
devu bhai u sure abt refund?
havent got it yet
17. imdevu   I Like It. |Report Abuse|  Link|Oct 19, 2015 4:40:54 PMReply
non ABSA refunds processed today. 14% allocation in retail category.
Should be credited to Demat by wednesday.
16. Vidyasagar   I Like It. |Report Abuse|  Link|Oct 19, 2015 3:10:44 PMReply
Where can we see the allotment? can you pls. give the URL to check
15. Gaurav Halwasia   I Like It. |Report Abuse|  Link|Oct 18, 2015 7:49:31 PMReply
Actually the login in First Come First Serve which they considers all the application(s) comming on day-1 comming at the same time. They don''t the logic of FCFS based upon absolute time on which application was done with broker/registrar.
14. Manush   I Like It. |Report Abuse|  Link|Oct 18, 2015 5:40:45 PMReply
When will be allotment done. and at which site we cans see it.
and on what day the listing will be done
13. anand   I Like It. |Report Abuse|  Link|Oct 18, 2015 3:24:14 PMReply
Yes its on ratio of about 14% of what u applied. If u had applied on day 2 u wont get anythin
12. vk   I Like It. |Report Abuse|  Link|Oct 18, 2015 2:13:25 PMReply
I thought the allotment was planned to be done on first come first serve basis, but looks its on the ratio. Can someone clarify.
11. Janix   I Like It. |Report Abuse|  Link|Oct 18, 2015 12:27:21 PMReply
Bonds not yet in Dmat account. ASBA debit happened on saturday 17th Oct.
10. anand   I Like It. |Report Abuse|  Link|Oct 18, 2015 12:19:58 PMReply
Janix bhai have u got cr of bonds in demat or just absa deduction?

Also any non asba got cr in demat ac??
9. ROOPESH   I Like It. |Report Abuse|  Link|Oct 17, 2015 9:57:31 PMReply
which sight allotment can be seen
8. Janix   I Like It. |Report Abuse|  Link|Oct 17, 2015 3:58:06 PMReply
Applied for 120 bonds, allotted 17. ASBA amount debited today
7. ASWINI   I Like It. |Report Abuse|  Link|Oct 15, 2015 6:22:50 PMReply
I have applied 1000 Bond when I get my bond and on which date you have allotted bond
6. ASHWIN   I Like It. |Report Abuse|  Link|Oct 15, 2015 10:22:14 AMReply
Allotment will be on 16oct. Listing around 1050.
5. Janix   I Like It. |Report Abuse|  Link|Oct 14, 2015 3:21:27 PMReply
No debit for ASBA application so far
4. anand   I Like It. |Report Abuse|  Link|Oct 14, 2015 10:51:23 AMReply
Anyone who applied ASBA got money deducted??
3. HIMANSHU   I Like It. |Report Abuse|  Link|Oct 6, 2015 5:50:00 PMReply
2. Aris   I Like It. |Report Abuse|  Link|Oct 4, 2015 10:19:38 PMReply
i dont think so
1. S.K.   I Like It. |Report Abuse|  Link|Oct 2, 2015 3:10:51 PMReply
Will refunds of NTPC TFB''s be received by 5.10.2015?