Published on Tuesday, June 26, 2018 by Dilip Davda
Shriram Transport Finance Co. Ltd. (STFCL) is a flagship company of Shriram group of south and is one of the largest asset financing non-banking finance companies in the organised sector in India that catering to first time buyers (“FTB”) and small road transport operators (“SRTOs”) for financing preowned commercial vehicles. In addition, it provides commercial vehicle finance for new commercial vehicles. STFCL also provides financing for passenger commercial vehicles, multi-utility vehicles, three wheelers and tractors as well as ancillary equipment and vehicle parts finance, such as loans for tyres and engine replacements, and provide working capital facility for FTBs and SRTOs. The company offers financial services to commercial vehicle operators, thereby providing comprehensive financing solutions to the road logistics industry in India.
As at March 31, 2018, STFCL had a network of 1213 branches across India and presence in 862 rural centers enabling it to access a large base of approximately 1.86 million customers, including most major and minor commercial vehicle hubs along various road transportation routes in India.
To meet onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company and General corporate fund needs, it is coming out with a debt offer of Secured Redeemable Non-Convertible Debentures of face value of Rs.1000 each amounting to Rs. 1000 crore with a green shoe option of Rs. 4000 crore making a total issue size of Rs. 5000 crore. Issue opens for subscription on 27.06.18 and will close on or before 20.07.18. This is the 8th NCD offer from it in last five fiscals. Minimum application is to be made for 10 NCDs (i.e Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. NCDs is having a tenures of 3 yrs, 5 yrs and 10 yrs. and a coupon rate ranging from 8.93% to 9.40% with interest payment mode of Monthly, Yearly and Cumulative. It is offering additional coupon rate of 0.10% for category III and IV (i.e. HNIs and Retail) and senior citizens will get add further additional incentive of 0.25%. This offer is rated CRISIL AA+/Stable by CRISIL and IND AA+ by India Ratings. Such rating indicate that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. Post allotment, NCDS will be listed on BSE and NSE. This offer is lead managed by Axis Bank Ltd., A K Capital Services Ltd., Edelweiss Financial Services Ltd., J M Financial Ltd. and Trust Investment Advisors Pvt. Ltd. Catalyst Trusteeship Ltd. is the debenture trustee and Intigrated Registry Management Services Pvt. Ltd. is the registrar to the issue.
On a consolidated basis, STFCL has posted turnover/net profits of Rs. 10361.97 cr. / Rs. 1183.62cr. FY16), Rs. 10904.47 cr. / Rs. 1265.63 cr. (FY17) and Rs. 12339.56 cr. / Rs. 1556.75 cr. (FY18). As on 31.03.18 its gross NPAs stood at 9.16% and net NPAs at 2.83% of net loan assets, up from 8.17% and 2.66% respectively for a year ago period. Post issue, its current debt equity ratio of 5.04 with stand enhanced to 5.43 times. As on 31.03.18 its paid up equity capital of Rs. 226.91 crore is supported by free reserves of Rs. 12361+ crore.
Conclusion: Being AA+ rated debt offer from a reputed group from south is worth considering investment for long term regular returns. (Subscribe).
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 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.