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DHFL 10,000 Crore NCD Issue – August 29, 2016:

After success of its maiden public NCD issue of 4000 Crore, DHFL has come up with one more issue of 10,000 crore.Company will paid annual interest on NCDs for a tenure of 3 Yrs,5 Yrs and 7 Yrs as opted by investor.

DHFL is deposit taking Housing Finance Company (HFC) regulated by NHB – National Housing Bank which regulates,refinance & supervises HFCs conducting business in India.

Details of DHFL 10,000 crore NCD issue are as follows:

Important Dates:

  1. Issue open date: Aug 29, 2016.
  2. Issue close date: Sept 12, 2016.

Interest Rates:

Interest paid in this issue will be annual only.coupon rate for HNI and Retail individual investors are as follows

DHFL NCD ISSUE AUGUST 29,2016

Other details:

  1. Credit rating : “AAA” from CARE & BWR which indicates higher safety regarding timely servicing the financial obligations, as well it allow company to access debt financing at competitive rate of interest.
  2. 30% each of NCD issue size  reserved for HNIs and Retails individual investors.
  3. Taxation : Interest received will be added in debenture holders total income & taxed accordingly.If NCDs are held in physical mode & interest paid is above Rs.5000 then tax will be deducted at source.For NCDs held in demat mode no tax will be deducted at source but its taxable.If NCDs are sold in secondary market then appropriate long term or short term capital gain tax will be applicable.
  4. No put or call option :Neither company nor investor will able to redeem NCDs before maturity. NCDs held in demat mode can be sold in secondary market at prevailing yield.
  5. Security :NCDs will be secured by company by creating a first ranking pari passu charge on specific receivables of the issuer for the principal and interest thereon.

Financials of DHFL:

DHFL NCD FINANCIALS

DFL NCD PROFIT AFTER TAX

DHFL NPA Details:

dhfl ncd & NPA details

Most of the Housing Finance Companies have able to maintain their NPAs below 1% which indicates robust asset quality.

Should you invest in DHFL NCD or not:

This is individually customized decision considering individual credit risk profile.Considering credit rating,secured nature of issue & over all performance of company investor can think to invest small part in this issue.Its suggested to invest if you can able to hold NCDs till its maturity and investing just for listing gains may not be a good idea.

Tax Saving New Fund Offers:

Considering positive market sentiments and reducing rates from fixed income products fund houses are now focusing on tax saving products. Sundaram Mutual fund has come up with 10 year closed ended Micro cap cum 80C tax saving fund while new fund house Mahindra Mutual fund will launch its maiden ELSS equity fund – Mahindra Kar Bachat Yojana.

We will take view of both new fund offers and returns of ongoing ELSS schemes.

  1. Sundaram Long Term Micro Cap Tax Advantage Fund: Sundaram MF has come up third series of  Micro Cap Tax advantage fund of tenure 10 Yrs (3650 Days).This fund will invest in Small Cap / Microcap stocks and since small cap index is now at high valuation level, it will be high risk / High gain category fund against ongoing ELSS funds which generally adopts multicap strategy. This is closed ended fund. so invest in this fund only if investment horizon & risk profile matches with this fund.Investors can participate up to Nov 11, 2016 in this scheme.
  2. Mahindra Kar Bachat Yojana: This will be open ended ELSS scheme to be launched by new fund house Mahindra Mutual fund.This will be its maiden equity fund.This will like other ongoing ELSS schemes.This New Fund Offer is expected to open on August 22, 2016.

Performance of Other Selected ongoing ELSS schemes:

BEST ELSS TAX SAVER MUTUAL FUND

Please note that returns earned by individual investors largely depends on point of entry in the fund.

One can view that funds have performed differently over a period of time.

Considering,decreasing interest rates on tax saver deposits,PPF & other fixed income instruments,investors need to shift towards tax saver mutual funds as preferred tax saving option (at least have some allocation),of course with understanding of how equity fund works.

DHFL NCD Issue August 2016:

DHFL – Dewan Housing finance Limited – second largest private sector housing finance company has come with Secured, NCD issue with face value of Rs.1000 each & issue size aggregating up to Rs.1000 crore, with option to retain over subscription up to 4000 crore limit.

Company may issue NCDs in one or more tranches.

DHFL was established in 1984 with an objective to provide housing loan assistance to low – medium income group.

DHFL has also presence in Life insurance & Asset management with joint venture partner Pramerica (Prudential of America)

Details of DHFL NCD issue are as follows:

Imp Dates:

  1. Issue open date: Aug 03, 2016.
  2. Issue close date:Aug 16, 2016

 

Also View:

DHFL 10,000 Cr NCD – Aug 29, 2016

 

Different category of investors like – Institutional investors,Corporates,HNIs,Retail individual investors are eligible to apply.

  • High Networth Individuals: Applying for more than Rs.10 Lakh aggregating across all series.

Here we will consider coupon rates for Individual / HNI investors :

Interest rates FOR INDIVIDUAL INVESTORS (Retail / HNI):

Coupon rates depends on tenure of NCDs and interest payment frequency.

Monthly Interest payment:

Interest will be paid monthly.

DHFL NCD MONTHLY INTEREST

Annual interest payment:

DHFL NCD ANNUAL INTEREST PAYMENT

Cumulative option:

Principal and cumulative interest to be paid at the end of tenure.

DHFL NCD CUMULATIVE INTEREST PAYMENT OPTION

Floating rate option:

For tenure of 03 yrs, floating rate option based on CPI – consumer price inflation is available for investor.Retail / HNI Investor will get spread of 4.18% above CPI and interest will be paid annually.

DHFL NCD FLOATING RATE OPTION

Reference CPI will be avg of last 12 months.So interest will reset annually.

 

Interest payment for Non Cumulative option will be on actual basis and one can use following formula to calculate expected interest:

Interest on NCD for Non-Cumulative mode

= (NCDs allotted) X (Face Value) X (Interest Rate/100) X (No of Days)/366

 

Other issue details:

  1. Credit Rating :CARE AAA & BWR AAA indicates stable issue & highest safety.
  2. Listing : Both @ BSE & NSE.
  3. No call or put option : Neither company not investor will able to redeem NCDs before tenure.But investors holding NCDs in demat mode can sell in secondary market.
  4. Allotment is on first come first served basis.30% of issue size is reserved for retail individual investor – not applying for more than 10 Lakh & 30% for HNIs i.e. applying for more than Rs. 10 Lakh.
  5. Min application amount: Rs.10,000/-
  6. Security :Issue will be secured for both principal and interest thereon.Minimum security cover of 1.1 times of principal & interest  will be maintained.

Profit after tax / financials of DHFL :

 

DHFL NCD FINANCIALS

DFL NCD PROFIT AFTER TAX

 

Should you invest in DHFL NCD:

Company has shown robust growth in profits since last few yrs.As well considering highest credit rating and secured nature of issue investor can invest some part of fixed income portfolio in this issue.We are in falling rate scenario and interest rate of around 9.20% can be considered as good interest in this environment.

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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