Piramal Enterprises has devised a secure NCD issue and is currently accepting subscriptions. Piramal Enterprises Limited is a non-deposit-taking, RBI-registered systemically important NBFC engaged in providing wholesale and retail lending in India. Piramal Enterprises offers interest rates up to 9.35%. These bonds are issued in five different series with holding periods of 2, 3, 5 and 10 years. Should you invest in Piramal Enterprises NCD October 2023 issue? What are the risk factors to consider before investing in such high-risk NCDs?
About Piramal Enterprises Limited
The company is the flagship company of Piramal Group, one of India’s prominent conglomerates. The company operates as a non-deposit-taking, RBI-registered systemically important non-banking financial company (NBFC) and is engaged in providing wholesale and retail lending services. Retail lending activities are primarily carried out through the company’s wholly owned subsidiary Piramal Capital and Housing Finance Company Limited, a housing finance company registered with the National Housing Bank. The company was founded in 1947 under the name ‘Indian Schering Limited’ and entered the pharmaceutical industry through acquisition in 1988.
Piramal Enterprises NCD – October 2023 Publication Details
| Subscription start date | October 19, 2023 |
| Subscription end date | November 2, 2023 |
| Issued securities name | Piramal Enterprises Limited |
| Type of security | Safe, rated, listed, redeemable, non-convertible bonds |
| Publication size (base) | 200 million rupees |
| Publish size (option to keep beyond subscription) | 800 million rupees |
| Total publication size | 1 billion rupees |
| Issue price | 1,000 rupees per deposit |
| face value | 1,000 rupees per deposit |
| series | Ⅰ～Ⅳ |
| minimum lot size | 10 bonds and then 1 bond |
| tenure | 2 years, 3 years, 5 years, 10 years |
| Interest payment frequency | yearly |
| Listed | Within 6 business days for BSE |
| lead manager | AK Capital Services Limited, JM Financial Limited, Nuvama Wealth Management Limited |
| bond trustee | IDBI Trusteeship Services Limited |
NRIs are not eligible for this NCD subscription.
October 2023 Prospectus Published by Piramal Enterprises NCD
What is the NCD interest rate of Piramal Enterprises?
| series | I | II | Ⅲ | Ⅳ |
|---|---|---|---|---|
| Interest payment frequency | yearly | yearly | yearly | yearly |
| Tenure (years) | 2 | 3 | Five | Ten |
| Coupon (% per year) | 9.00% | 9.05% | 9.20% | 9.35% |
| Effective yield (%/year) | 9.00% | 9.05% | 9.19% | 9.34% |
| Amount at maturity (Rs.) | 1,000 | 1,000 | 1,000 | 1,000 |
What is the credit rating of Piramal Enterprises NCD?
These NCDs are rated ICRA AA/Stable by ICRA Limited. This indicates that financial instruments with this rating are considered to have a high degree of security in terms of timely repayment of financial obligations. The credit risk of such products is very low.
How is the company’s financial situation?
This is the company’s consolidated profit.
- Year ending March 22 – Rs 1,987 crore.
- Year ending March 23 – Rs 9,968.5 million
Why invest in Piramal Enterprises NCD?
- These NCDs offer attractive interest rates of up to 9.35%. It is higher than the bank’s FD interest rate.
- These are secured bonds. This means that if a company goes into financial trouble for any reason and closes down, NCD investors will receive priority repayment of principal and interest.
- These NCDs come in five different series. Investors have the choice to invest in the series that suits them best.
Would you like to invest in these bonds?
The risk factors for investing in these bonds are:
- Significant customer defaults and resulting non-performing assets could adversely affect the Company’s business.
- The company’s operations are particularly vulnerable to interest rate risk. Changes in interest rates can have a material adverse effect on our net interest income and financial performance.
- Our operations require significant amounts of capital, and disruptions to our funding sources could increase our average cost of borrowing.
- The company’s personal lending business involves working with certain relatively high-risk borrowers. Any such customer default could adversely affect its business.
- Please refer to the NCD prospectus for complete risk factors.
Should you invest in Piramal Enterprises October 2023 NCD?
These NCDs offer high interest rates of up to 9.35%. These bonds will attract investors as banks and financial institutions are currently offering lower interest rates. These are secure NCDs. This means that if a company goes into financial trouble or ceases operations for any reason, investors will have priority in interest payments and capital repayments. These NCDs are rated AA/Stable by ICRA, which is considered a good rating.
On the other hand, there are also risk factors associated with investing in such NCDs. Investing in FDs of NBFC companies is riskier. In the past, NBFC companies have defaulted on his NCD payments and in some cases, interest payments of NCD investors have been delayed several times in the past.
Investors who understand all these risk factors can invest in these NCDs.
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Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
