9% Piramal NCD Secured Bonds: Check If This Investment Option Is Meant For You

NCD issuing company details:

Piramal Capital & Housing Finance Limited is a fully-owned subsidiary of Piramal Enterprises Limited. The company extends home loans, real estate and corporate financial services to individual and Corporate property seekers etc.

In respect of the real estate financing the company extends Loan against property, housing finance, digital purchase finance as well as online personal loans.

Issue objective:

The funds mopped up via the issue shall be put towards onward lending, financing, and for repayment /prepayment of interest and principal of existing borrowings (at least 75%). Also the funds will be utilized towards other general corporate purposes.

NCD credit rating:

CARE has accorded the secured NCD of Piramal a rating of CARE AA(CWD) (Under Credit Watch with Developing Implications) and ICRA (AA) with outlook (negative) by ICRA Ltd. This rating is lower than the highest rating of ‘AAA’. Also , the negative outlook suggests that there can still be a further downgrade for the issue.

Financials: The company commanded a loan book of Rs. 32,254 crore as well as net NPAs of 1.9% as of March 31, 2021. Real estate lending forms 3/4th of the company’s total loan book while non-real estate and retail lending the rest. The company’s current CAR is well above the regulatory requirements at 32.3 percent.

Coupon rate and payment frequency

Option	Tenure	Interest	Coupon
I	26 Month	Annual	8.35%
II	26 Month	Cumulative	N/A
III	36 Month	Annual	8.50%
IV	60 Month	Annual	8.75%
V	120 Month	Annual	9.00%

How to apply for Piramal NCD?

Both through the online and offline route one can apply for Piramal NCD. You can do so this through your demat account. Also if you want you can download the form from the company’s website and fill up the required details and pay via cheque and submit it at the nearest collection centre.

Taxation:

Any interest received on these NCDs shall be taxed as per your tax slab. Further, NCDs bought in the issue and held till maturity (both at face value) will not have any capital gains and therefore no tax. In case the NCDs are redeemed after a holding period of one year then LTCGT at the rate of 10%without indexation plus cess of 4 per cent will apply.

Conclusion:

The NCDs are secured meaning the company in case of any financial exigency will first pay the investors by liquidating its assets, nonetheless the recent takeover of DHFL may impact the company’s loan book as well as its capital adequacy ratio. All the more in a rising interest regime, it is always best to book in such NCDs for a short term. Also do note that the ratings of these NCDs may see a revision in rating with the change in financials of the company. So, conservative investors who cannot afford risk element in their investment need not pick this product for higher return. Also, the rating suggests that this NCD issue is not for the risk averse investor class.

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