Shriram Transport Finance NCD Oversubscribed

Shriram Transport Finance NCD was over-subscribed on the first day itself, and Business Standard reports that there is a lot of gray market activity on this NCD, much like there was on the SBI bond issue.

India Infoline reports that the issue is closed for subscription already.

I’m unable to find the official press release, so if you know about it please share a link and I’ll include that in the article.

That said, there are three points I’d like to make about this over-subscription.

1. Don’t regret it if you’ve missed the issue: Shriram Transport Finance was offering a good interest rate, but it was not a crazy good lucrative rate because there are several banks that are offering fairly good deals on their fixed deposits. Here are some of the higher ones.

These are just three banks that come to my mind, and I plan to update my high interest rate FD page very soon, and will do a comprehensive post after that.

If you think about the amount you were going to invest in this NCD, and think of the difference in interest you will earn between these fixed deposits and the NCD, then that’s probably not much.

So, I’d say don’t regret this too much, and definitely don’t get suckered into thinking that you should invest on the first day of the next NCD that’s announced.

2. Buying from the open market is not the same as subscribing to it here: There was a question a couple of days ago about the difference between buying this NCD from the stock exchange versus subscribing to it in the open offer.

First of all, you don’t even know whether you will get to buy it from the stock exchange or not as the volumes in the bond segment are quite low right now. I was looking at a BSE report that showed that the highest volume were on SBI bonds and the daily trading volume for them was just around Rs. 90 lakhs, which is pittance compared to equity.

Secondly, you will not get the bonds at face value, you will probably have to pay extra, and in all likelihood that will negate whatever extra you earn by way of a higher interest rate.

3. There will be other NCDs: The retail debt market is picking up in India, and we should see more such issues from other companies in the future. Who knows, you might even get a higher interest rate from a company that’s on better financial footing.


I’m tempted to restate some of things I said when I learned about the SBI bond gray market, but I don’t want to repeat myself, so I’d just say that personally I wouldn’t get too charmed by promises of listing gains from these bond issues, and if you want to read more then you can always look at my old post gray market returns and annualizing them.

19 thoughts on “Shriram Transport Finance NCD Oversubscribed”

  1. My order status says “executed ” now in sharekhan. looks like allotment is done. not really sure how it works for NCDs.

    1. I’d expect that to mean allotment is done, but not sure myself. Please do leave a comment when you see them in your Demat account so we have some reference for future issues. Thanks as always Mithlesh.

      1. Hey Manshu…

        It doesn’t really mean allotment. Just found out today that allotment will be out next week sometime.Checked with ingterated enterprise they say it will come out any time between monday and wednesday.

          1. Hey Manshu!!

            I got the refund today. I applied for 50 and got 14 .very disappointing indeed. I would try to get out of it on listing if possible as the allotment is very less.

              1. yeah it is very less. But i got a mail today from integrated enterprises saying

                Shriram Transport is offering 11% interest on a 3 year Deposit – “Shriram Unnati” exclusively for the shareholders & IPO allottees of listed NCDs.

                Offer Closes on 31/07/2011.

                not sure what this is really.

  2. I heard they are considering only first day’s applications and giving full allotment to them. This may just be rumours. saw somewhere on internet messages.

  3. Looking at the over subscription, I doubt if retail investors will get the same no. of bonds they applied for… Some ppl like me might not even get anything at all 🙂 On the official release of the offer closing yesterday itself, there were advertisements carried out in TOI (although not sure if it was there in all editions)

    1. Subscription will be on First come first served basis…so those who applied earlier have higher chances of getting allotment…But listing is can not be guaranteed to be very high….Because Bond Market is still maturing in India.

      By the way online subscription through Edelweiss and Kotak had started from last thursday itself (ie even before the issue opened for subscription) and it is believed that it was oversubscribed during that time itself…(Actually the filled up forms with cheques or DDs would have been submitted monday early morning)

  4. Thanks manshu…

    I applied for this NCD issue but it doesn’t seem to be a good decision now because of over subscription.It had reserved Rs 200 crore worth of bonds for retail investors but this was subscribed over 11 times.

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