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Tata Capital Fin. NCD Tranche II (Aug19) Offer review (Subscribe)

  • 2nd debt offer as Tranche II since September 2018 from Tata Group.
  • Attractive coupon rates with good rating of AAA-Stable by CRISIL and CARE
  • Allotment will be on "First Come - First Served" basis.
  • Investment for medium to long term many be considered. 

About Company:

Tata Capital Financial Services Ltd. (TCFSL) is a Tata group company and a demerged part of Tata Captal Ltd. which is under the fold of Tata Sons Ltd. It is a Systemically Important Non - Deposit taking Non - Banking Financial Company ("ND - SI - NBFC") focusing on providing a broad suite of financing products customized to cater the needs of various segments. TCFSL is engaged in the business of corporate financing, consumer financing, rural financing and marketing of White Label Tata Card. The company has a robust marketing and distribution network which provides customers a diversified financial services platform with presence in 23 states through 125 offices as on June 30, 2019. Its offices are reduced by 9 compared to status as on 30.06.18.

Issue Details:

TCFSL is coming out with a maiden debt offer of NCDs with a base size of ₹500 cr. with a green shoe option to retain oversubscription to the tune of ₹3626 cr. Issue consists of ₹2997.90 crore Secured Non-convertible debentures and ₹1128.10 cr. Un-secured Non Convertible Debentures aggregating to ₹4126 cr. (residual shelf limit after the first offer). Funds mobilized through this debt offer shall be utilized for the purpose of onward lending, financing, and for repayment /prepayment of interest and principal of existing borrowings of TCFSL (up to 75%) and the rest as general corpus fund.

Specific Terms For Each Option Of The Ncds

We are offering NCDs which shall have a fixed rate of interest. The NCDs will be issued at a face value of ₹1,000 per NCD. Interest on the NCDs shall be payable in the manner, as set out hereinafter. The terms of the NCDs offered pursuant to the Trance II Issue are as follows:


Options/Series

I

II

III

IV

Frequency of Interest Payment

Annual

Annual

Annual

Annual

Minimum Application

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

In multiples of thereafter

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

Face Value of Secured NCDs (₹/ NCD)

₹1,000

₹1,000

₹1,000

₹1,000

Issue Price (₹/ NCD)

₹1,000

₹1,000

₹1,000

₹1,000

Tenor from Deemed Date of Allotment

3 years

5 years

8 years

10 years

Coupon Rate (% per annum) for category I and II

8.35%

8.40%

8.55%

8.75%

Coupon Rate (% per annum) for category III and IV

8.45%

8.50%

8.65%

8.85%

Effective Yield (Per annum) for category I and II

8.34%

8.39%

8.54%

8.74%

Effective Yield (Per annum) for category III and IV

8.44%

8.49%

8.64%

8.84%

Mode of Interest Payment

Through various options available

Redemption Amount (₹/ NCD****

₹1,000

₹1,000

₹1,000

₹1,000

Maturity Date (From Deemed Date of Allotment)

3 years

5 years

8 years

10 years

Nature of indebtedness

Secured

Unsecured Subordinated

Note: Our Company would allot the Option I NCDs, as specified in this Tranche II Prospectus to all valid Applications, wherein the Applicants have not indicated their choice of the relevant Option of NCDs.


The company is offering NCDs with a face value of ₹1000. These NCDs will have tenures of 3 years, 5 years, 8 years and 10 years, with interest rates in the range of 8.35% to 8.75% for Category I and II while coupon rates will be 8.45% to 8.85% for Category III and IV. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Allotment will be in demat mode only. Allotment will be made on "First come - First Served" basis. Issue opens for subscription on 13.08.19 and will close on or before 23.08.19. Post allotment, it will be listed on BSE and NSE.

Lead Managers/Registrar/Debenture Trustee:

Issue is jointly lead managed by Edelweiss Financial Services Ltd., A K Capital Services Ltd. and Axis Bank Ltd. Karvy Fintech Pvt. Ltd. is the registrar to the issue and Vistra ITCL (India) Ltd. is the Debenture Trustee. Post issue TCFSL's debt-equity ratio will stand enhanced to XX from current XX.

Rating Of The Issue:

This issue is rated CRISIL/AAA-Stable by CRISIL and CARE/AAA-Stable by CARE. The ratings of the NCDs indicate the highest degree of safety regarding timely servicing of financial obligations.

Financial Performance

For the last two fiscals, TCFSL has (on a consolidated basis) posted total income/net profits of ₹4271.68 cr. / ₹397.48 cr. (FY18) and ₹ 5529.68 cr. / ₹437.10 cr. (FY19). As of March 31, 2019, its gross NPAs and net NPAs constituted 2.45% and 0.39% of gross loans and net loans, respectively.

TCFSL's debt equity ratio of 6.94 as on 30.06.19 will stand enhanced to 7.67 post this issue.


Conclusion / Investment Strategy

A debt offer with Good Rating from well known investor friendly Tata group with attractive coupon rates make it a worthy option for investors looking for long term fixed income. (Subscribe)

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 7, 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 Tata Capital NCD Aug 2019 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Tata Capital NCD Aug 2019 worth investing. The Tata Capital NCD Aug 2019 Note sets the NCD expectations in systematic way which tells you if Tata Capital NCD Aug 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Tata Capital NCD Aug 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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