Religare Finvest NCD Issue Details

by Manshu on September 12, 2012

in Featured, Investments

Religare Finvest which is a fully owned subsidiary of Religare is also coming out with a NCD issue shortly, and this is about the same time when they issued NCDs last year.

I’m going to talk about some key points that people looking to invest in NCDs are looking for and then move on to some general aspects.

Issue Open and Close Date: The NCD open date is on September 14 2012 and the close date is on September 27 2012.

Issue Available to NRIs: NRIs can invest in these NCDs on a non – repatriable basis.

Minimum Investment Amount and Listing: There will be 5 series and the minimum for applying in any series is Rs. 10,000. There will be 4 categories of investors and like the other issues, retail investors will get a slightly higher rate than others. Here are the 4 categories of investors:

  • Institutional
  • Non Institutional
  • Non Reserved Individual Investors: Individual investors who invest more than Rs. 5 lakhs.
  • Reserved Individual Investors: Individual investors who invest less than Rs. 5 lakhs.

Here is a chart that shows the terms and conditions of the 5 series.

 

Religare Finvest 2012 NCD Issue

Religare Finvest 2012 NCD Issue

 

Interest Payment and Record Date: Interest will be paid on 1st April every year wherever applicable, and the record date is going to be 10 days prior to the interest payment date.

Secured or Unsecured: This is a secured issue; this doesn’t however mean that your money is guaranteed by anyone and if you’re unsure of what this means then please leave a comment.

Credit Rating: The issue has been rated “CARE AA-” by CARE and “ICRA AA-” by ICRA. Both of these are good ratings.

Other Things to Consider

These yields are certainly better than the Shriram City Union NCD that came out before this one, and at over 12% for all maturities I think this is pretty decent. Whether you should invest or not of course depends on where else have you invested and if this issue fits in with your other goals or not.

One thing I have always said in the past and want to repeat here is that it is not possible for most retail investors or even auditors to sniff out trouble in a company till it’s very late, and in absence of that, the best bet is to spread your money around and be safe in case something goes wrong.

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{ 76 comments… read them below or add one }

Gaurav Bansal September 12, 2012 at 11:25 am

Couple of things which would be helpful could be:
1) what is the CAR for 2012? It 16.6% last year and was in a decreasing trend.
2) is the CAR comparable with its peers?
3) growth of the loan book and income in 2011-2012?

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ankurm September 12, 2012 at 1:00 pm

This is the best NCD, offering 75bps higher than shriram and 50bps higher than muthoot for 5 year tenure.

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shaggy September 12, 2012 at 4:01 pm

hi i am new to NCDs… is it like if i invest Rs100000 in the above scheme for 5years then it will become Rs.200000 at the end?

is these are as safe as Bank FD’s?

please suggest

thanks

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Shiv Kukreja September 12, 2012 at 6:43 pm

Hi shaggy… If you invest Rs. 1 lakh in the ‘Series V’ of this issue, you’ll get Rs. 2 lakhs after 70 months i.e. after 5 years and 10 months. The effective yield would be 12.6184% per annum.

Bank FDs are more safe than these NCDs.

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Gotam September 12, 2012 at 4:16 pm

If I invest in series II or IV and after 1 or 2 year I sell the bond on the stock exchange where they are listed. Than how will I get the benefit of interest for 1 or 2 year for which I hold the bonds as the interest will be paid on maturity.

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Shiv Kukreja September 12, 2012 at 7:20 pm

Hi Gotam… The interest amount gets accumulated under the cumulative options and as compared to the annual interest option, their market price should ideally be higher by approximately equal to the accrued interest.

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Vincent September 13, 2012 at 10:30 am

Hi Shiv,

What is better option I or II according to you?
Is it better to get interest annually or have it accumulated for compounding growth?

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Shiv Kukreja September 13, 2012 at 10:44 am

Hi Vincent… You mean Option I – 36 months and Option II – 60 months ??

I usually don’t take the cumulative option with risky issues – I would prefer “Series I” under 36 months and “Series III” for 60 months but “Series V” looks the most attractive to me from the risk-reward perspective.

Why don’t you buy Religare NCDs or other NCDs from the secondary markets ??

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Vincent September 13, 2012 at 11:06 am

Hi Shuv,

This is the 1st time I am investing in a NCD and I do not have a direct visibility on the NCD’s in secondary market and I have always known that most of these NCD’s are illequid. I was about to go for SCUF when yesterday my agent told me ab Religare. After reading about it on onemint, I thought its a better choice.
Can you suggest any value picks from the current market?
I want to invest for 3 years and hence thought option 1 or 2 under Religare would be a good option.
Even I was lured towards series 5 which is for 70 months, however I pulled back thinking 3 years is a short period and its safe too, although I know I can sell it in secondary market, but again there is a risk of non buyers?

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Shiv Kukreja September 13, 2012 at 11:37 am

Hi Vincent… Issues launched last year were bigger in size and probably can offer you a better liquidity than the current issues in the long term. Liquidity is an issue but I think it is reasonable enough for a retail investor to exit in an urgent need. You can probably invest in those series which carry a higher trading volumes.

Most of these current NCD issues are going to list at a discount to their issue price, probably then you can invest in the same issues at a lower price. Please note that the business sentiment has deteriorated for all these companies as compared to the last year. But, if you still think IPOs involve lesser headache and a smooth process then you should go ahead with these issues.

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Virender Verma June 5, 2013 at 4:10 pm

We are both retired senior citizens in mid seventies….
I had purchased at launch a non-cumulative Religare 500x1000x36 NCD e-Certificate Allotment Advice No. 100522 dated 23-09-2011, on which only the first interest warrant no. INE958G07569 instalment of Rs.31963.80/- dated 2-4-2012 has so far been paid with great hassles.
Please advise me the procedure of redemption/closing of the NCDs and Direct Credit of the entire admissible amount of investment with accrued interest amount into our mandate bank account from which the cheque for the purchase of NCDs was issued by us.
I shall highly appreciate a notification alert to me at my email virender_verma@hotmail.com.
I am now tired of handling such correspondence perennially with out living in peace…
With kind regards…Verma

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Shiv Kukreja June 12, 2013 at 11:50 pm

Dear Mr. Verma,
Your investment in these bonds is due for redemption on 23rd September, 2014, on which you will get your invested amount back in your bank account. There is no provision of redemption before this date. But, if you are holding these bonds in your demat accounts, then you can sell these bonds in the secondary markets (like shares) through your broker at the prevailing market price. If you have any further query about it, you can contact me at +91-9811797407.

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Shiv Kukreja September 13, 2012 at 10:54 am

Check this link – http://www.edelweiss.in/Debt/DebtSnapshot.aspx?cn=RFLNCDO2C3

Time to maturity is just 2 years and the yield is substantially higher here.

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Vincent September 13, 2012 at 11:09 am

But look at the volumes traded. I wish to invest Rs 4Lacks and I dun think I will get 400 volumes of Religare Finvest Limited (RFLNCDO2C3) in secondary market.

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Shiv Kukreja September 13, 2012 at 11:56 am

You can selectively buy these NCDs from the secondary markets even if you want to invest Rs. 4 lakhs. Over a period of 2-3 days, you’ll be able to have 400 units quite easily. The volumes were 28 earlier, it is 340 now and it touched a high of Rs. 1028.51. Volumes are also lower as last year it got listed only on the BSE.

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Vincent September 13, 2012 at 12:23 pm

If you had to selectively choose the most apt ones, could you please help me with thier names and lised numbers? to create an app breakup and I will instruct my agent acoordingly.
Thanks a ton for all your help and advise.

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Shiv Kukreja September 13, 2012 at 12:34 pm

Sorry Vincent, that is a bit time consuming job, demands analysis and responsibility. That I do for my clients only once the trust is created and they have complete faith on my analysis.

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Vincent September 13, 2012 at 12:52 pm

No Problem. Thanks for all your help anyways…

Cheers,
Vincent

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Shiv Kukreja September 13, 2012 at 12:54 pm

You are welcome! :-)

Vincent September 13, 2012 at 11:26 am

Thanks A lot Shiv for taking your precious time out and answering my queries.
Much appreciated.

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Shiv Kukreja September 13, 2012 at 11:57 am

You are welcome Vincent! :-)

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VikasG September 20, 2012 at 4:08 pm

Hi Shiv,

Reg http://www.edelweiss.in/Debt/DebtSnapshot.aspx?cn=RFLNCDO2C3 (RFL -NCD-O2C3-12.25% ANNUAL)

If the last interest payment is on Apr 2014 and the redemption is in Sep 14 and the redemption value is same as face value, can you tell me why would anyone hold this bond after Apr 2014? Will they pay interest from Apr 2014-Sep 2014?

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Shiv Kukreja September 20, 2012 at 7:53 pm

Hi VikasG… Yes, the company will pay the due interest till maturity in September 2014.

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VikasG September 20, 2012 at 11:01 pm

In that case, shouldn’t they mention that the redemption value will be > 1000 i.e. 1000+interest from Apr-Sep 2014? It is slightly confusing for newbies like me.

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Shiv Kukreja September 20, 2012 at 11:20 pm

Not sure if they have done anything wrong in it. Most of the issuers mention the “Redemption Amount” to be equal to the “Face Value” only, if the interest is paid at regular intervals. But, you also have a valid point. Probably they could have mentioned about it under the “Interest Payment Details” as “Last Interest Payment (April 1 – Sept. 23) – On Maturity”.

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Vincent September 12, 2012 at 6:05 pm

Hi Manshu,

As ever good snapshot…
My Queries
How has the 2011 Religare NCD performing?
Has there been any reduction in Debts loan book?

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ankurm September 12, 2012 at 6:09 pm

RFL was the best performing NCD, in fact I partially sold my holding and my capital gain yield was more than the coupon rate, as price had risen. If your NCD yield falls below your coupon rate, it shows your price has risen beyond the interest accumulation. For a period, RFL NCD was yielding 12%, while coupon rate was 12.5%

Reply

Vincent September 13, 2012 at 11:14 am

Hi ankurum,

I am sorry, I did not understand this part ” If your NCD yield falls below your coupon rate, it shows your price has risen beyond the interest accumulation”

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ankurm September 14, 2012 at 10:09 am

Roughly, Yield = Coupon/Market price. So if Yield falls below coupon %, it means Market price is above face value. Eg assume 10% bond (100 face value), trades at 105 few days after listing, it means its yield = 10/105=9.5% which is coupon rate. We could even do a YTM analysis for this, just to make things simpler i assumed simple yield and an annual bond

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ankurm September 14, 2012 at 10:10 am

Roughly, Yield = Coupon/Market price. So if Yield falls below coupon %, it means Market price is above face value. Eg assume 10% bond (100 face value), trades at 105 few days after listing, it means its yield = 10/105=9.5% which is coupon rate. We could even do a YTM analysis for this, just to make things simpler i assumed simple yield and an annual bond

Reply

Vincent September 14, 2012 at 11:24 am

Ok got it.. Making things simpler in Religare’s example, the coupon is 12.25% and if its trading at say 1025, then this calculation doesnt work?

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ankurm September 14, 2012 at 11:30 am

It does hold, the last interest paid was 5 months back in april, the fair value (fv 1000 + 52 accrued int for 5 months) is 1051, which is higher than market value of 1025. Essentially, the 25 re discount (over fair value) is spread over remaining tenure 2 years, so YTM is higher than coupon by 1.25%, hence YTM=13.5% . My previous example was simple assuming that there is zero accrued interest and bond rises immediately after listing

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AB September 14, 2012 at 11:07 am

Is the subscription on a first cum first serve basis?

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Shiv Kukreja September 14, 2012 at 12:44 pm

Yes, the allotment will be on “first-come-first-serve” basis.

Reply

Shiv Kukreja September 14, 2012 at 8:00 pm

Religare Finvest NCD issue is subscribed 0.32 times on day 1 without the green-shoe option. This time it is poor response from the retail category and somewhat better response from the institutional investors and corporate investors.

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santonu September 15, 2012 at 10:58 pm

Mr Shiv, do you not think that like IPO , ASBA facility should be extended to NCD also so that there will be more participation and it will be easier to apply.And allotment should not be done on first come first serve basis and better there should be different mechanisim. SEBI should take care of this two points

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Shiv Kukreja September 15, 2012 at 11:08 pm

ASBA facility has been extended by SEBI since IIFFL NCD issue and will remain available with all the issues now. Check this link: http://www.nseindiaipo.com/issueforms/html/index.html

I think, as of now, it is better to have the allotment made on a “first-come-first-serve” basis. Once the NCDs market gets developed and there are lesser no. of days for the offer period, then probably pro-rata allotment should be introduced. I think SEBI is working on those lines.

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santonu September 15, 2012 at 10:47 pm

I think this is unsecured NCD whereas shriram city union is secured one and rating agency gives AA rating. So avoid this religare NCD, go for Shriram city union. Always invest in secured NCD. Religare NCD will likely to be available in secondary market at discount

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Shiv Kukreja September 15, 2012 at 10:53 pm

No, Religare issue is also a secured one. It is mentioned in the post itself. But there is a slight difference in the ratings. CARE has rated both these issues – Religare is ‘AA-‘ and SCUF is ‘AA’.

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santonu September 15, 2012 at 10:59 pm

thanks

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sati.. September 17, 2012 at 12:08 am

In secondary market if the bonds are available at cheap rate with more interest, why do people buy this from the issue? Is it because of volume availability? Lets say if one needs to invest 1L. Does it make sense to apply in the new issue or to buy already listed NCD’s to earn more interest?

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Shiv Kukreja September 18, 2012 at 11:23 am

It makes complete sense to buy already listed NCDs from the secondary markets rather than these IPOs as the yields are trading higher than the interest rates offered. Most of these NCDs are marketed well by the companies or the agents to make us buy at a lower yield.

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Vincent September 18, 2012 at 11:26 am

Hi Shiv,

We have to factor, Brokerage and taxes levied when buying from secondary market right?
Here we do not pay anything additional.

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Shiv Kukreja September 18, 2012 at 11:35 am

Hi Vincent… Even if I consider the brokerage & stamp duties etc. to be 0.50%, it makes sense to buy these NCDs from the secondary markets.

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sati.. September 19, 2012 at 2:12 pm

Hi Shiv
can you suggest some article to read the factors to consider before investing NCD’s from secondary market?

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Shiv Kukreja September 19, 2012 at 9:12 pm

Hi sati… I have not seen/read any such good article as probably I did not require any for myself or any of my clients. Manshu had written a series of NCD posts. But I’m not sure whether they covered the factors to look for before buying listed bonds. Here are those articles:

http://www.onemint.com/2011/06/29/introduction-to-ncds-part-1/
http://www.onemint.com/2011/08/28/introduction-to-ncds-part-ii/
http://www.onemint.com/2011/09/09/introduction-to-ncds-part-iii/

I’ll try to write one such article soon.

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CVS September 17, 2012 at 4:29 pm

Hi,
Is it advisable to cancel the order placed for Shriram City Union Finance NCD and instead invest in Religare or Muthoot NCDs? As a layman, I see the only difference in the rate of returns. What is expert advise, considering the technical aspects – company past performance, future prospects- which one is better and safer out of the three? Also, any other company is coming up with NCDs in near future?
thanks…

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Shiv Kukreja September 18, 2012 at 11:31 am

Hi CVS… Religare NCDs issue looks marginally better than SCUF issue from interest rate point of view but SCUF is a better managed company. Muthoot issue is a complete no-no to apply for. SREI Infrastructure is planning to come up with an issue soon. I read somewhere that even Reliance Capital and DHFL are planning to issue NCDs in the near future.

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CVS September 23, 2012 at 6:25 pm

Thank you Mr. Shiv… My application money for IIFL has been fully refunded on 22/Sep, what could be the reason? I applied for it on 7/Sep. So, is it worth applying for Religare NCDs or should wait for right time for buying the IIFL/Religare NCDs from secondary markets? Are there any complications in buying from Secondary market thru Demat+Online Trading account?

Thanks for your advise..

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Shiv Kukreja September 23, 2012 at 7:38 pm

IIFFL issue retail category quota got fully exhausted on the 2nd day itself i.e. on September 6th. People who applied on 5th got 100% allotment and who applied on 6th got 41% allotment. You got none as you had applied for it on 7th.

IIFFL NCDs have listed with a premium over its issue price. Religare issue also looks fine from the interest rate perspective but I would advise people to buy last year’s NCDs from the secondary markets. Overhead costs and liquidity are the issues which deter people from buying these NCDs from the secondary markets.

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CVS October 4, 2012 at 7:08 pm

Thanks Mr. Shiv for the details.

When is the SCUF & Religare Finvest NCD 2012 allotment date? From when would they be available in Demat account for trading?

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Shiv Kukreja October 4, 2012 at 8:35 pm

Hi CVS… Allotment Dates and Listing Dates of SCUF NCDs and Religare NCDs have not been disclosed as yet.

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Jaspreet October 9, 2012 at 10:09 pm

For SCUF, you should have got NCDs into your demat a/c or refund into your a/c.

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CVS October 11, 2012 at 3:23 pm

No NCD allotment and No Refund for SCUF yet, however, received NCDs for Religare a couple of days back.

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Shiv Kukreja October 11, 2012 at 7:06 pm

You can the allotment status from this link –

http://www.integratedindia.in/NCD_Allot_detail.asp

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Nwo September 17, 2012 at 10:40 pm

Don’t fall for such traps, instead invest in FD for low but safe returns. Greed will not take you anywhere…………

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Shiv Kukreja September 18, 2012 at 11:47 am

Hi Nwo… Yes, Bank FDs are relatively safer to invest in but the returns are 2-3% lower than these NCDs. Apart from the returns, these NCDs offer some other comparative advantages over FDs. So, if you invest with some good companies like SBI, IFCI or Shriram Transport, then it makes sense to invest in these NCDs. Company FDs fall inferior to these NCDs from every angle.

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Nwo September 17, 2012 at 10:41 pm

Don’t fall for such traps, instead invest in FD for low but safe returns. Greed will not take you anywhere…………
Muththoot keeps coming out with NCD’s every now and then. They don’t have money to pay the investors so they come up with new issue every now and then. They take this money and pay back to investors who have redeemed. Stay away.

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Shiv Kukreja September 18, 2012 at 11:51 am

I’ve written a post on Muthoot Finance NCDs issue which opened yesterday for subscription, you can check the review from this link – http://www.onemint.com/2012/09/17/muthoot-finance-ncd-details/

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rajesh September 19, 2012 at 5:25 pm

I want to know that, if I buy NCD with cumulative interest option from secondary market and hold it till maturity, can I get all benifit like the investor who applies during initial offering.

Rajesh

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Shiv Kukreja September 20, 2012 at 10:01 am

Yes, you’ll get all such benefits.

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ashish September 20, 2012 at 11:36 am

tax treatment of ncd income .
1) yearly interest option
2) gross after 5 year

please clarify

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Shiv Kukreja September 23, 2012 at 12:39 am

1) Taxable every year.
2) Not sure but it should be taxable when you get interest income on maturity after 5 years. If you sell these bonds on the exchanges before maturity, then Capital Gain tax will be applicable.

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Shashwat October 3, 2012 at 5:25 pm

What is the listing date? There seems to be some renewed interest in listed ncds , I purchased muthoot finance 1300MFL14 and MFINNCD2A in 1030 and 1070 few days back and their prices have risen sharply.

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Lekhraj Gupta October 12, 2012 at 11:47 am

Today 12.10.2012 there are some NCD listing of Religare Finvest Limited (RELIFIN) on NSE in Series N1 to N8. Not sure this is same or not. There are seller and buyer in every series but no trading today.

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Shiv Kukreja October 12, 2012 at 12:23 pm

Yes, these NCDs have listed today but no trade has got executed.

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Vincent October 17, 2012 at 4:58 pm

Hi Shiv,

I received 100% of applied allotment.
I had applied for 3 year cumulative option.
How do you suggest I track these on secondary market?
Are there any other better valuations right now?

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Shiv Kukreja October 17, 2012 at 5:24 pm

Hi Vincent… You can save this link to your favorites – http://www.edelweiss.in/Debt/DebtSnapshot.aspx?cn=RELIFIN-N2

5-year cumulative option traded at Rs. 970 today, so it is offering a better value at the moment. But liquidity has dried up in the Religare NCDs. Shriram Transport NCDs are still trading at a discount, you can invest in those NCDs also.

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Vincent October 18, 2012 at 11:34 am

Thanks Shiv

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Shiv Kukreja October 18, 2012 at 11:40 am

You are welcome!

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Vincent November 10, 2013 at 1:18 pm

Hi Shiv,

Trust you doing well.
Its been a year now since I invested in this NCD ( 3 years cumulative)

https://www.edelweiss.in/debt/Religare-Finvest-Ltd/RELIFIN-N2.html

Looking at the current performance, do you think its doing well? There is no Yeild to date mentioned. Coupon was 12.25%
Understand the redemption date is Oct 2015, will it make sense to try and sell it in secondary market? I will need funds in Q1 2014

Regards,
Vincent

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Shiv Kukreja November 10, 2013 at 10:04 pm

I’m doing fine Vincent, thank you! & hope you are also doing great!

Looking at the price of Rs. 1,105, it has given a return of 10.50% in 13 months time. Though it is not a great return, but then interest rates have risen overall. So, I would say it has given an expected return and the performance is not bad.

If you sell it in the market at its current price of Rs. 1,105, the buyer will get the remaining Rs. 309.36 (Rs. 1,414.36 – Rs. 1,105) on maturity. This implies a return of 28% (Rs. 309.36 / Rs. 1,105) in 23 months time.

If you think you can forego the remaining 28% return in the urgent need of funds, then only you should sell the bonds.

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Vincent November 12, 2013 at 12:13 pm

Hi Shiv,

Yeah i get it :)
Looking at this it obviously makes sense to wait :)
however do you feel that after 23 months the FV will be above 1414 as committed? or is this all a fixed concept?

Regards,
Vincent

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Shiv Kukreja November 12, 2013 at 12:23 pm

After 23 months, it will be exactly Rs. 1,414.36, not more than this figure and not less than this figure. Religare will pay you back this amount.

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Vincent December 10, 2012 at 12:59 pm

Hi Shiv,

I had applied for option 2, however I see some amount being credited as ECS in Oct. Its a very nominal amount. close ot 0.5 %.
Do you have any idea whats this for?

Regards,
vincent

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Shiv Kukreja December 11, 2012 at 3:51 pm

Hi Vincent… If I am not wrong it is the interest payment from the date of application to the deemed date of allotment.

Reply

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