SREI Equipment Finance NCD - July 2017 offer review (Apply)

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SREI Equipment Finance Ltd (SEFL) is a wholly-owned subsidiary of Srei Infrastructure Finance Limited (Srei) provides financing for construction and mining equipment. It is also a frequent visitor to debt market for raising funds. It came with such offer in January 2017 last and is now once again coming to raise Rs. 1000 crore. The base issue size is Rs. 500 crore with a green shoe option to retain oversubscription to the tune of additional Rs. 500 crore.

SEFL is issuing unsecured, redeemable non-convertible debentures of face value of Rs 1,000 each. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD thereon, thereafter. Offer opens for subscription on July 17, 2017 and will close on or before July 31, 2017 with an option to close early. This offer is made under tier II capital which it will use for lending activity as well to repay a part of company's loans and meet general corporate purposes. Offer is being made on “First Come-First Served” basis. This issue is rated “BWR/AA+ (stable)” by Brickwork Ratings and “SMERA/AA+ (stable)” by SMERA Ratings. Issues with such ratings 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. Issue is lead managed by Edelweiss Financial Services Limited, A K Capital Services Ltd , SPA Capital Advisors Ltd and Trust Investment Advisors Pvt Ltd. Axis Trustee Services Ltd is the Debenture Trustee and Karvy Computershare Pvt Ltd is the registrar to the issue.

Allotment of these NCDs will be made compulsorily in demat mode only; however, Category III Investors can apply for allotment of NCDs in the physical form for Series II, Series V and Series VIII. These NCDs have tenures of 5 years ' 3 months, 7 years and 10 years with interest payment options on Monthly, Annually or Cumulative basis as per the choice of investors. This instrument has coupon rates ranging from 9.25% to 9.55%.

Category III Investors in the proposed Issue who are also holders of NCD(s)/Bond(s) previously issued by our Company and/ or SIFL in past public issues of Secured NCDs and/or are equity shareholder(s) of Srei Infrastructure Finance Limited (“SIFL”) and/or senior citizens and/or Existing Employees of Srei Infra and/or Company on the Deemed Date of Allotment and applying in Series I, Series II, Series IV, Series V, Series VII and/or Series VIII NCDs shall be eligible for additional incentive of 0.15% p.a. provided the NCDs issued under the proposed Issue are held by the investors on the relevant Record Date applicable for payment of respective coupons in respect Series I, Series II, Series IV, Series V, Series VII and/or Series VIII NCDs. Post issue its current debt equity ratio of 5.13 will rise to 5.53. Its net NPAs declined from 1.99% as on 31.03.16 to 1.76% as on 31.03.17.

On performance front, while fiscal 2014 to 2016 marked stagnant top line with declining trends of bottom line, for fiscal 2017 it suffered a setback in top line but a surge in bottom line. Its total income and net profits were Rs. 2619.33 cr. / Rs. 225.38 cr. (FY14), Rs. 2609.78 cr. / Rs. 153.02 cr. (FY15), Rs. 2615.09 cr. / Rs. 115.26 cr. (FY16) and Rs. 2495.33 cr. / Rs. 148.84 cr. (FY17).

Conclusion / Investment Strategy

Considering AA+ (stable) rating and attractive coupon rates, investors looking for steady interest income may consider for medium to long term investment

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Nov 22, 2019

Review 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

The SREI Equipment Finance NCD July 2017 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if SREI Equipment Finance NCD July 2017 worth investing. The SREI Equipment Finance NCD July 2017 Note sets the NCD expectations in systematic way which tells you if SREI Equipment Finance NCD July 2017 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in SREI Equipment Finance NCD July 2017 by providing NCD recommendations i.e. subscribe, avoid and neutral.