L&T Finance Limited NCD MARCH 2019 PUBLIC ISSUE: DETAILS & REVIEW

L&T Finance Limited Ltd NCD March 2019 Public Issue: L&T Finance 2019 NCD Details, Features, Credit Rating, Reasons to Invest, Price, Date, Allotment Status, Listing, Reviews, Status & How to Apply?

Nonconvertible debentures are financial instruments that are used by the companies to raise money for business purposes.

Yes, such NCD, unlike convertible debentures are not convertible into equity.

L&T NCD for March 2019 is all set to propose secured NCD’s in this Tranche-1.

L&T financial limited is one of the top names in leading private non-banking financial services companies in India. it is a part of the larger L&T group.

L&TFL has 223 branches in 218 cities across 21 states and 3 union territories, as of December 31, 2018. In addition, for their microloans business, they have 1,181 meeting centers covering 274 districts across 14 states in India, as of December 31, 2018.

The return is  9.35% per annum which is hard to resist for investors now. The company enjoys credible credit ratings.

If we look upon the current scenarios, the bank Fixed deposit offers a very low-interest rate and the investor are looking for high rate NCD.

NCD is the best option to invest money. also, the interest rate provided by the company is lucrative making it hard to resist for the investors.

L&T Finance NCDShould you invest in  L&T Finance NCD’s of March 2019 as other fixed income options are offering lowest rates? What are the risk factors one should consider before investing in L&T Finance LTD NCD March 2019?

Read our post till the end to learn L&T Finance Limited NCD finance review.

In this post, I would provide you with some interesting insights about L&T finance limited NCD.

What are Non-Convertible Debentures?

Non-convertible debentures are unsecured bonds that cannot be converted into equity or stock.

One of the lucrative features of NCD is they proffer a higher rate of interest as compared to convertible debentures.

NCD interest rates are determined by the company issuing the NCD.

NCD investment can be made by individuals, banking companies, primary dealers other corporate bodies registered or incorporated in India and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs).

Invest in secured NCD to get manifold investment benefits.

About L&T Finance Limited

L&T is one of the leading private non-banking financial service companies in India in terms of loans outstanding, as of December 31, 2018.

The promoter of the L&T is registered with RBI as a nonbanking finance company

The company is the part of the larger L&T group which is one of the topmost leading conglomerates in India with a presence across infrastructure, power, heavy engineering, electrical and automation, hydrocarbons, IT and technology services, financial services, project development, metallurgical and material handling, realty, shipbuilding, construction equipment, machinery and industrial products sectors.

L&T incorporated into the financial service business in the year 1994. In the year 2016, the promoter reorganized its financial business into three primary business segments i.e., rural, wholesale and housing with return on equity as an important performance metric.

L&T Finance NCD Mar 2019 Issue details

 Issuer L&T Finance Limited (View Report)
 Issue Size Rs. 500 crores
 Issue Public Issue by the Company of secured redeemable non-convertible debentures of face value of Rs. 1,000 (Indian rupees one thousand) each (“Secured NCDs”) for an amount of Rs. 500 crore (“Base Issue Size”) with an option to retain oversubscription up to Rs. 1,000 crore aggregating up to 150,00,000 Secured NCDs amounting to Rs. 1,500 crore (“Tranche 1 Issue Limit”) (“Tranche 1 Issue”) which is within the shelf limit of Rs. 5,000 crore and is being offered by way of the Tranche 1 Prospectus dated February 22, 2019 containing inter alia the terms and conditions of tranche 1 issue ( “Tranche 1 Prospectus”), which should be read together with the Shelf Prospectus dated February 22, 2019 (“Shelf Prospectus”) filed with the registrar of companies, Kolkata, West Bengal, (“ROC”), Stock Exchanges and Securities and Exchange Board of India (“SEBI”). The Shelf Prospectus and Tranche 1 Prospectus constitutes the prospectus “Prospectus”).
Credit Ratings  The NCDs proposed to be issued under this Issue have been rated ‘[ICRA] AAA (stable) (pronounced as ICRA triple A with Stable outlook)’ for an amount of Rs. 5,000 crores, by ICRA Limited (“ICRA”) vide their letter dated December 21, 2018 and revalidated vide revalidation letter dated February 1, 2019 and further revalidated by a revalidation letter dated February 20, 2019, CARE AAA / Stable (pronounced as CARE triple A with Stable Outlook) for an amount of Rs. 5,000 crores, by CARE Ratings Ltd. (“CARE”) vide their letter dated December 28, 2018 and revalidated vide revalidation letter dated January 31, 2019 and further revalidated by a revalidation letter dated February 20, 2019 and IND AAA / Stable (pronounced as IND triple-A with Stable outlook) for an amount of Rs. 5,000 crores, by India Ratings and Research Private Limited (“India Ratings”), vide their letter dated December 31, 2018, and revalidated vide revalidation letter dated January 31, 2019, and further revalidated by a revalidation letter dated February 20, 2019. The rating of NCDs by ICRA, CARE and India Ratings indicate that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations and carry lowest credit risk. For the rating letter and rationale for these ratings, see Annexure A, Annexure B and Annexure C of the Tranche 1 Prospectus.
 Issue  opens  Wednesday, 06th March 2019
 Issue  closes  Wednesday, 20th March 2019
 Issue Price  Rs. 1,000 per NCD
 Minimum  Application  Rs. 10,000/- (10 NCDs) across all Series and in multiples of 1 (one) NCD of Rs 1,000/- each thereafter
 Listing  The NCDs are proposed to be listed on BSE & NSE. NSE shall be the Designated Stock Exchange for the Issue. The NCDs shall be listed within 6 (six) Working Days from the date of Issue Closing Date. For more information, see the section titled “Other Regulatory and Statutory Disclosures – Listing” of the Tranche 1 Prospectus.

Features of L&T Finance NCD of Mar 2019

  • Issue start date: 6-March-2019
  • Issue end date: 20-March-2019

NCD’s are available in 6 different options.

The interest of these NCDs is payable monthly, yearly and on maturity.

The face value of the NCD bond is Rs 1,000.

The minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this, you can invest in multiples of 1 bond.

These NCD bonds would be listed on BSE and NSE. Hence, these are liquid investments.

Non-resident Indians (NRI’s) cannot invest in these NCD’s.

CARE has rated this Non-convertible debenture as AAA with outlook stable and ICRA rated them as AAA with outlook stable and India rating as AAA, which indicates that the instrument with this rating is considered to have the highest degree of safety regarding timely servicing of financial obligation and carry lower credit risk.

Interest Rates for L&T Finance NCD March 2019

Interest Rates:

Series I II III IV V VI
Frequency of Interest payment Annual Cumulative Annual Monthly Annual Monthly
Tenure (In Months) 37 months 37 months 60 months 60 months 120 months 120 months
Nature Secured Secured Secured Secured Secured secured
Coupon (% p.a) – Category I &II 9.00% NA 9.10% 8.75% 9.20% 8.84%
Coupon (% p.a) – Category III, and IV 9.10% NA 9.25% 8.89% 9.35% 8.98%
Effective Yield (% p.a) – Category I 9.00% 9.00% 9.09% 9.10% 9.19% 9.20%
Effective Yield (% p.a) – Category II,III, IV 9.10% 9.10% 9.24% 9.25% 9.34% 9.35%

Source:- Bloomberg

What is the Issue Break up?

  1. QIB Portion – 20% of the issue
  2. Corporate Portion – 20% of the issue
  3. High Net Worth Individuals – 30% of the issue
  4. Retail Investors – 30% of the issue
  5. Upcoming NCD Issue 2019

How is the company doing in terms of Financials?

It is significant to gauge the financial status of the company. Financial statement provides financial information that investor and creditor use to evaluate the company’s financial performance.

Here are the financials:

  1. Interest income was Rs 4,144 Crores for FY17 Vs Rs 5,245 Crores for FY2018.
  2. Net profit improved from Rs 16 Crores in FY17 to Rs 289 Crores in FY2018.
  3. Net NPA is at 0.56% as of March 31, 2018.

Why to Invest?

  • Lucrative interest rate where one can get a 9.35% yield
  • Superb credit rating from CARE, ICRA AND IND RR.
  • It is issuing secured NCDs which are safe to invest as compared to another unsecured NCD
  • as per section 193 of the Income Tax Act NCDs are not subject to TDS, Yes, there is no tax on the income of interest on NCDs
  • Easy liquidity

Why not to invest in L&T Finance 2019 NCD?

  • Any delay or disturbance in the source of funding or increase in costs of funding could adversely affect its liquidity and financial position
  • The Function in a highly competitive industry and its inability to compete may adversely affect its business.
  • The peril of non-payment or default on the part of borrowers may hamper the company’s financial position
  • they are affected by volatility in the interest rate for both its lending and borrowings which could cause its net increase income to decline and adversely affect the result of operation and profitability.
  • any severe developments in the industry in which they operate may adversely affect its business and results of an operation
  • part of its collection from clients are in cash, exposing us to certain operational risk
  • Any investor can check the risk factors in the prospectus

How to Apply L&T Finance NCD 2019?

Please check the details for how to apply L&T finance NCD issue 2019?

You can apply for these nonconvertible debentures in demat form. If you have demat you can log in to your demat account go to IPO/NFO/NCD section and apply for the same

The procedure for applying for these nonconvertible debentures will be through ASBA (Your amount would be blocked initially and upon allotment, your amount would be deducted and NCD allotment would be done, else your amount would be unblocked) You can contact any of the lead managers websites to know more details on how to apply them.

How L&T Finance Mar 2019 NCD are taxed?

There would not be any interest on the NCD. It is immaterial whether the company would deduct the TDS or not? one has to declare the interest on the income in their income tax returns and pay the taxes as per the income tax bracket.

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When this L&T Finance NCD of 2019 would get listed on BSE/NSE?

Very frequently asked question by the keen investors is when this L&T Finance would get listed on BSE/NSE.

These L&T finance NCD would get listed after the 6 working days from the date of closure.

Means it will list on approximately on 29th March 2019. The last date for subscription is 20th March 2019.

If it is subscribed earlier and subscription closes, it would get listed after 6 days from such closure.

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Should you invest in L&T Finance NCD of March 2019?

The significant query in the minds of an investor is

  • Though L&T finance limited is offering secured nonconvertible debentures, we have seen that NBFC companies have shelved the payment due to liquid crunch in the company. the latest example could be DHFL. Are you still interested to invest in such NCD?
  • The duration of these non-convertible debentures  37 months, 60 months and 120 months tenure. do you want to park your money for 10 years? We cannot determine how the company would perform in 5 to 10 years, therefore, it is always advisable to invest in short term NCD.
  •  You can look for 37 months or 60 months secured NCDs as these are for short term and they are secured in nature.
  • L&T Finance NCD provide return up to 9.35% interest per annum, however, is high risk. If you have a high-risk appetite or high-risk taker

Consideration before investing in NCD

A Few important factors that would be helpful before investing in an NCD are stated below

Ratings & Safety- CRISLIL and other agency give the rating to the non-convertible debentures. Therefore, a lower rating signify higher risk and uncertainty Please check the ratings before you park your hard earned money in any investment

Company Background – The Credit, repayment history, as well as other fundamentals of the company raising the NCDs, needs to be carefully analyzed before making any investment decision.

Liquidity: NCDs are liquid since they are listed on the stock exchange. They might have a built-in clause that allows you a premature exit, i.e., a put option. This option can be exercised after the lock-in period, which is usually greater than 90 days.

Taxation and TDS: NCDs other than tax-free bonds are taxed as per individual tax slabs under the head, “Income from Other Sources”. All NCDs listed on the stock exchange is not subject to TDS.

Investors who exit the NCD before a year are subject to short-term capital gains tax. Investors who exit after a year, but before maturity are subject to Long Term Capital Gains Tax.

The rate of Return: for NCDs is usually greater than other debt instruments. The current rate of return is between 10-11%

Interest payout: may be quarterly, half-yearly, annual or cumulative as per the discretion of the investor. The cumulative option is the best since the interest gets reinvested and earns money for the investor. However, the choice rests is dependent on the investor and would depend on his investment agenda.

Contact for Investment

Sanriya Investment Advisors Pvt. Ltd.
Kamdhenu, 2nd Floor, Opp. Prakash (MSEB Office) Bhavan,
Next to Bank of Baroda, Near Chattushringi Temple, above Tribes India,
Senapati Bapat Rd, Shivajinagar, Pune, Maharashtra 411016
(M): 9822 403 407 (T): 9371 011 297
(E): santosh@sanriya.in ; sanriyainvest@gmail.com (w): www.sanriya.in.

Registrar/allotment Status
Link Intime India Private Limited 

C-101, 247 Park, L.B.S. Marg, Vikhroli (West), Mumbai 400 083.
Tel.: + 91 22 4918 6200; Fax: + 91 22 4918 6195
Email: ncd.ltfin2019@linkintime.co.in
Investor Grievance mail: ncd.ltfin2019@linkintime.co.in
Website: www.linkintime.co.in;
Contact Person: Shanti Gopalkrishnan

Click here to check your Allotment status

Company Contact Details
L&T FINANCE LIMITED
Brindavan, Plot No. 177, C.S.T. Road, Kalina,
Santacruz (East), Mumbai -400098, Maharashtra
Tel:+91 22 6212 5000; Fax: +91 22 6621 7509
Compliance Officer: Ms. Apurva Rathod;
Tel: +91 22 6212 5000; Fax: +91 22 6621 7509
E-mail:apurvar@ltfs.com;
Website: www.ltfs.com

Conclusions

Dear Readers

L&T Finance NCDs proffer higher interest rates. Such lucrative interest rates provided by the NBFC companies binds the investor to park their money. Secured NCD is somewhat better and secure than unsecured.

if you have a great risk appetite and still wish to invest in NCD even after IL&FS Scam, you can consider investing in NCD for 37 months or 60 months.

If you are willing to cope with the risk and uncertainty then you can consider investing in such nonconvertible debentures.

Readers, do you will worth investing in such NCD.

I hope the above post on L&T finance limited is the best of your knowledge. being an investor you must take an informed decision!

Have a great day ahead.

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