Sunday, May 27, 2018



JM Financial Credit Solutions Ltd, part of JM Financial Group is coming out with its Maiden offer of SECURED, Rated, Listed NCD with a Issue size of 750 crores
JM FINANCIAL is a pan India Company providing Financial Solutions to Real Estate Developers.  The company is promoted by JM Financial Group and INH Mauritius 1 Fund (led by ex-CEO of Citigroup, Vikram Pandit)
The Company posted a Net Profit of Rs.631 crores on a revenue of Rs.3131 crores for the Financial Year 2018.
What is a NCD?
NCD is Non-Convertible Debenture. An instrument which offers a FIXED rate of INTEREST for a specified tenure. Non-Convertible Debentures do not get CONVERTED into Equity shares at a later date unlike a Convertible Debenture.

The Details of the issue are
     1.       Face Value of Debenture – Rs.1000
     2.       Minimum – 10 Debentures (Rs.10,000) (and in multiples of Rs.1000)
     3.       Issue opens – 28th May 2018
     4.       Issue closes – On or before 20th June 2018
     5.       NCD to be listed on BSE

Rating: ICRA AA/Stable by ICRA and IND AA/Stable by India Rating.  These Ratings indicate a HIGH DEGREE OF SAFETY regarding timely servicing of payment of Interest and Principal.

Coupon For Cat I, II, III & IV:
for 38 Months   9.25% p.a. (Annual)  (Effective Yield (per annum) is 9.26%.
for 5 Years         9.11% p.a.  (Monthly)  Effective Yield (per annum) is 9.49%.
for 5 Years        9.50% p.a.  (Annual)  Effective Yield (per annum) is 9.49%.
for 10 Years      9.34% p.a. ( Monthly) Effective Yield (per annum) is 9.74%.
for 10 Years      9.75% p.a.  (Annual)  Effective Yield (per annum) is 9.74%.
Interest Option: Monthly & Annually

Frequency of Interest payment Anuual Cummulative Annual Monthly Annual Monthly
Tenor 38 months 38 months 60 months 60 months 120 months 120 months
Coupon rate 9.25% NA 9.50% 9.11% 9.75% 9.34%
Effective Yeild 9.26% 9.24% 9.49% 9.49% 9.74% 9.74%

Allotment on FIRST COME FIRST SERVE basis.
Company will give interest @8% on allotment money and @5% on refund amount.

since the NCD are to be issued in DEMAT Format, there will be no deduction of TDS. However, the investor is liable to declare this Interest Income in his Returns and pay INCOME Tax as PER HIS TAX SLAB

PLEASE NOTE, DEMAT IS NOT MANDATORY to invest in this issue.

Yes. Yes. Yes
Why? Why? Why?

       1.    The NCD is SECURED. Meaning the Debentures are BACKED by JM’s assets to fulfil the DEBT OBLIGATION.
      2.    The interest rates are ATTRACTIVE especially looking at the alternatives available
      3.    Ample Liquidity. You can ALWAYS sell the NCD in the Stock Market (as it is listed)
            Investors looking at steady interest income for long term may consider investment in                this AA/stable rated debt issue. 
      4.    Ratings too indicate HIGH DEGREE OF SAFETY regarding timely servicing of payment of Interest and Principal.

Why you should not?
1. The interest are TAXABLE in the hands of investor as per Tax Slab
2. With interest rates starting to go UP again, there may be better issues in future days.

Please invest in the NCD in moderate portion and ensure that you do not cross your DEBT ALLOCATION.
Investors are strongly advised to contact their FINANCIAL ADVISOR who, being better informed and more knowledgeable, would be in a much better position on your INDIVIDUAL portfolio and advise accordingly.

The recently listed NCDs of Edelweiss Retail Finance is traded at about 1% PREMIUM to the issue price.....Hmm

All the best to your Financial Success,
Srikanth Matrubai

Standard disclaimer: 
This Blog and articles in this blog is for INFORMATIVE & EDUCATION  purposes only.
may have vested interest in all the investments that are discussed here and our views could well be baised.
You are strongly advised to contact your Financial Advisor and do your own due diligence.

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