SREI Equipment Finance NCD

SREI Equipment Finance a 50:50 JV of SREI group and BNP Paribas and is registered with the RBI as a non-deposit taking systemically important, non-banking financial company ('NBFC'). We provide financial products and services to companies operating in the construction, mining, technology and solutions, healthcare, ports and railways, oil and gas, agriculture and transportation sectors. Our financial products and services comprise loans, leases, rentals and fee-based services. It is engaged in the organized equipment financing sector in India with a principal focus on financing infrastructure equipment. It has widespread network of offices across India to cater to the needs of a diverse customer base across various business segments and runs certain innovative and targeted marketing schemes such as 'Paison Ki Nilami', 'Khul Ja Sim Sim', 'Khyshiyon Ki Barish' aimed at the Retail and SME segment.

The company is coming out with its maiden debt offer of Secured Redeemable Non-Convertible debentures of RS. 1000 each to raise Rs. 250 crore and has green shoe option to retain Rs. 250 crore additional funds in case of oversubscription, thus taking the offer size to Rs. 500 crore. This issue opens for subscription on 09th April 2015 and will close on or before 30th April 2015. This offer is having coupon rates ranging from 9.75% to 10.25% and interest payment mode of Monthly, Annually and Cumulative. Tenure for this offer is for 36 months, 39 months, 60 months and 84 months. Senior Citizens and permanent employees of the company will be given additional 0.25% incentive under category III (Retail).

Investors can choose their preferred option and coupon rate on the basis of their fund blocking needs. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. For retail investors allotment is available in demat and physical mode, but trading will take place only in demat mode. For other categories, demat mode allotment is compulsory. Post allotment, these NCDs will be listed on BSE and NSE. 75% of the funds so mobilized will be used for lending and loan repayments and the rest for corpus fund needs.

Issue is lead managed by Edelweiss Financial Services Ltd jointly with SREI Capital Markets Ltd. Axis Trustee Services Ltd is the debenture trustee and Karvy Computershare Pvt Ltd is the registrar to the issue. This offer has been graded as CARE AA and BWR AA (stable) by CARE and Brickwork respectively. This indicates high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. On performance front, the company that posted rising trends in top and bottom line till 2013 has seen reversal of trends for the fiscal 2014. For the first half it has seen further erosion in it. It's EPS that rose from Rs. 17.41 for 2010 to Rs. 47.60 for 2013 fell to Rs. 37.78 for 2014 and for first half of current fiscal it is at Rs. 17.22 (not annualized). Its net NPA has swelled to 4.07% for 2014 from 2.06% for 2012. Its current debt equity ratio of 2.20% will rise to 2.43% post this issue.

Those who are looking at interest income as interest rates are set for cooling off going forward, they may consider moderate investment.

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. Author has no plans to invest in this offer.