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SREI Equipment NCD offer review - Jan 2017 (Apply)

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SREI Equipment Finance Ltd (SEFL) is one of the leading non-banking financing companies in the organized equipment financing sector in India with a principal focus on financing infrastructure equipment. SEFL is registered with the RBI as a non-deposit taking systemically important, non-banking financial company. The company provides financial products and services to companies operating in the construction, mining, technology and solutions, healthcare, ports and railways, oil and gas, agriculture and transportation sectors. Its financial products and services comprise loans, leases, rentals and fee-based services.

To meet its lending requirements and repayment of loans, the company is coming out with Secured Redeemable Non-convertible debentures of Rs. 1000 each to mobilize Rs. 500 crore. The base size of the issue is Rs. 250 crore and has green shoe option for retaining 100 per cent oversubscription. Minimum application is to be made for 10 NCDs (Rs. 10000) and in multiples of 1 NCD (Rs. 1000) thereon, thereafter. Issue opens for subscription on 03.01.17 and will close on or before 20.01.17. Post allotment, NCDs will be listed on BSE and NSE. Although allotment is available in demat as well as physical mode, trading will take place only in demat mode. This is the second debt issue from this company since April 2015.

These debt instruments have maturity periods of 400 days, 3 years and 5 years and interest payment options are cumulative, monthly or yearly as per the choice of investors. The coupon rates are ranging from 8.90 per cent to 9.75 per cent. For cumulative scheme, for 400 days under cumulative scheme, it offers premium of Rs. 95-97, for 3 years Rs. 305-315 and for 5 years Rs. 575-593 per NCD on maturity depending on the category of investors. Post issue its current debt-equity ratio will stand enhanced from 4.83 to 5.03. While it's top line remains more or less stagnant, its bottom line has shown declining trends from FY 13 onwards that raises concern.

Issue is lead managed by Edelweiss Financial Services Ltd, A K Capital Services Ltd, Karvy Investor Services Ltd, SREI Capital Markets Ltd, Trust Investment Advisors Pvt Ltd. Axis Trustee Services Ltd is the debenture trustee and Karvy Computershare Pvt Ltd is the registrar to the issue. This offer has credit rating of BWR AA+ by Brickworks and SMERA AA/Stable by Smera ratings. These ratings are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.


Conclusion / Investment Strategy

Conclusion: Considering the prospects for equipment finance sector and the AA grade with lucrative coupon rates makes this offer attractive for those who are looking for steady interest income.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Dec 9, 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

More SREI Equipment Finance Ltd NCD Views / Analysis / Recommendations ...

The SREI Equipment Finance NCD Jan 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 Jan 2017 worth investing. The SREI Equipment Finance NCD Jan 2017 Note sets the NCD expectations in systematic way which tells you if SREI Equipment Finance NCD Jan 2017 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in SREI Equipment Finance NCD Jan 2017 by providing NCD recommendations i.e. subscribe, avoid and neutral.