Sakthi Finance is now coming up with a secured NCD bond that could double investors’ capital in 85 months.These bonds will open for application on his 17thth Closed on April 28thth April 2023. Sakthi Finance is an investment and credit company focused on financing used commercial vehicles. Sakthi Finance NCD has an interest rate of up to 10.25% and a yield of up to 14.3%. These NCDs are offered for terms of 24 to 85 months. Interest is paid monthly or at maturity depending on the NCD option. Should I invest in the April 2023 Sakthi Finance NCD issue? What are the risk factors to consider before investing in Sakthi Finance NCD 2023?
Also read: Mahila Samman Savings Patra 2023 – How good is this plan?
About Sakti Finance Limited
We are an investment and credit company focused primarily on used commercial vehicle financing.
We also finance the purchase of infrastructure construction equipment, utility vehicles, passenger cars, jeeps and other equipment. Funds provided are protected by a lien on the loaned assets. Our target customers are mainly small and medium-sized road transporters, mostly from rural or semi-urban areas. SRTO/MRTO seeks to process funds quickly at competitive interest rates. We identified this opportunity and positioned ourselves between the organized banking sector and local moneylenders by offering flexible and fast lending services to our customers.
Published by Sakthi Finance NCD – April 2023
| Opening date | April 17, 2023 |
| closing day | April 28, 2023 |
| Type of security | Protected, redeemable, non-exchangeable NCDs |
| issue size (base) | 100 million rupees |
| Issue size (oversubscription) | 100 million rupees |
| total issue size | 200 million rupees |
| issue price | Rs 1,000 per bond |
| face value | Rs 1,000 per bond |
| Minimum lot size | 10 bonds and then 1 bond |
| term of office | 24-85 months |
| Interest payment frequency | monthly or at maturity |
| listing | Within 6 business days for BSE/NSE |
Sakthi Finance NCD Interest Rate – Issued 23 April
| option | I | Ⅱ | Ⅲ | Ⅳ | X | Ⅵ | VII | VIII | IX |
|---|---|---|---|---|---|---|---|---|---|
| Interest payment frequency | monthly | Cumulative | monthly | Cumulative | monthly | Cumulative | monthly | Cumulative | Cumulative |
| Duration (months) | twenty four | twenty four | 36 | 36 | 48 | 48 | 60 | 60 | 85 |
| Coupon (annual rate) | 9.00% | NAMore | 9.25% | NAMore | 9.50% | NAMore | 10.25% | NAMore | NAMore |
| Effective yield (%/year) | 9.00% | 9.74% | 9.25% | 10.52% | 9.50% | 11.40% | 10.25% | 13.17% | 14.30% |
| Maturity (Rs.) | 1,000 | 1,194 | 1,000 | 1,315 | 1,000 | 1,455 | 1,000 | 1,658 | 2,013 |
What is the credit rating of these NCDs?
ICRA has assigned Sakthi Finance an NCD rating of BBB (stable). Products with this rating are considered to have moderate security with respect to timely servicing of financial obligations. Such financial instruments carry moderate credit risk.
What are the company’s profits?
The benefits are:
2020 – Rs 11.17 Crores
2021 – Rs 9.25 Crores
2022 – Rs 9.51 Crores
6 months ending 22nd September – Rs 5.88 Crores
Why invest in these NCDs
1) Sakthi Finance NCD offers attractive interest rates, investors can earn interest of up to 10.25%, with an annual interest rate of up to 14.3%.
2) Sakthi Finance’s profit fluctuates slightly but produces consistent margins. Investing in companies that generate consistent margins reduces default risk.
3) Issue a secure NCD. If the company is liquidated/closed for any reason, a safe NCD investor will prioritize repayment of capital along with interest as backed by the company’s assets. Hence investing in such safe NCD options is safe to do.
Why not invest in these NCDs?
1) Sakthi Finance NCD’s credit rating is BBB (Stable) by ICRA and is considered a low rating. Companies with a credit rating below ‘A’ are more likely to default on payments in the future.
2) Sakthi Finance operates in an increasingly competitive financial services industry, which has resulted in increased price pressure, which has adversely affected margins and revenues.
3) The company is involved in certain legal and other proceedings, and if those proceedings are determined to be unfavorable, it could have a material and adverse financial effect.
4) One of the incorporating group companies has defaulted on interest and principal payments to one of its creditors. Any adverse action taken/to be taken by a creditor may affect the financial condition of the Promoter and the Company.
5) The company faces disruptions in funding sources, inability to obtain or maintain statutory or regulatory approval to conduct business, impact from the performance of the Indian bond and equity markets, and increased levels of NPAs impacting the business. There are other risk factors such as etc. ,
6) See NCD prospectus for full risk factors.
Also read: Muthoot Finance Vs Kosamattam Finance Vs Muthoot Fincorp NCD – April 2023 – Which Is Better?
Should I invest in April 2023 Sakthi Finance NCD?
The next issue of Sakthi Finance NCD offers high interest rates and yields. Banks these days offer high FD rates, but these NCDs still offer high interest rates of up to 10.25% and yields of up to 14.3%. Investor money doubles in 85 months. The company also earns consistent margins and these are also collateralized NCDs.
On the other hand, these NCDs are rated BBB (Stable) by ICRA and are considered low ratings. In its prospectus, the company indicated that some of its group companies have defaulted on payments to creditors and interest. However, the current prospectus does not mention that one of his group companies has previously defaulted on payments on his FCNR bonds (as shown in his NCD prospectus last year). increase).
These NCD bonds are high risk. If investors are willing to consider all these risks, they can invest in these bonds, otherwise they can be avoided.
sauce: Sakthi Finance April 2023 NCD Prospectus from SEBI
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years.
