Shriram Transport Finance Co. Ltd. (STFCL), a flagship company of Shriram group of south and one of the largest asset financing non-banking finance companies in the organised sector in India catering to first time buyers (“FTB”) and small road transport operators (“SRTOs”) for financing preowned commercial vehicles, is making an NCD (non-convertible debenture offering).
Business
STFCS provides commercial vehicle finance for new commercial vehicles. STFCL also provides financing for passenger commercial vehicles, multi-utility vehicles, three wheelers and tractors as well as ancillary equipment and vehicle parts finance, such as loans for tyres and engine replacements, and provide working capital facility for FTBs and SRTOs. The company offers financial services to commercial vehicle operators, thereby providing comprehensive financing solutions to the road logistics industry in India.
As at March 31, 2018, STFCL had a network of 1213 branches across India and presence in 862 rural centers enabling it to access a large base of approximately 1.86 million customers, including most major and minor commercial vehicle hubs along various road transportation routes in India.
Shriram Transport NCD Issue
To meet onward lending, financing, and for repayment/ prepayment of interest and principal of existing borrowings of the Company and General corporate fund needs, it is coming out with a debt offer of Secured Redeemable Non-Convertible Debentures of face value of Rs.1000 each amounting to Rs. 1000 crore with a green shoe option of Rs. 4000 crore making a total issue size of Rs. 5000 crore.
The Issue opens for subscription on 27.06.18 and will close on or before 20.07.18. This is the 8th NCD offer from it in last five fiscals.
Minimum application is to be made for 10 NCDs (i.e Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. NCDs is having a tenures of 3 yrs, 5 yrs and 10 yrs. and a coupon rate ranging from 8.93% to 9.40% with interest payment mode of Monthly, Yearly and Cumulative.
It is offering additional coupon rate of 0.10% for category III and IV (i.e. HNIs and Retail) and senior citizens will get add further additional incentive of 0.25%. This offer is rated CRISIL AA+/Stable by CRISIL and IND AA+ by India Ratings.
Such rating indicate that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk. Post allotment, NCDS will be listed on BSE and NSE.
This offer is lead managed by Axis Bank Ltd., A K Capital Services Ltd., Edelweiss Financial Services Ltd., J M Financial Ltd. and Trust Investment Advisors Pvt. Ltd. Catalyst Trusteeship Ltd. is the debenture trustee and Intigrated Registry Management Services Pvt. Ltd. is the registrar to the issue.
Performance
On a consolidated basis, STFCL has posted turnover/net profits of Rs. 10361.97 cr. / Rs. 1183.62cr. FY16), Rs. 10904.47 cr. / Rs. 1265.63 cr. (FY17) and Rs. 12339.56 cr. / Rs. 1556.75 cr. (FY18).
As on 31.03.18 its gross NPAs stood at 9.16% and net NPAs at 2.83% of net loan assets, up from 8.17% and 2.66% respectively for a year ago period. Post issue, its current debt equity ratio of 5.04 with stand enhanced to 5.43 times.
As on 31.03.18 its paid up equity capital of Rs. 226.91 crore is supported by free reserves of Rs. 12361+ crore.
Conclusion: Being AA+ rated debt offer from a reputed group from south is worth considering investment for long term regular returns. (Subscribe).
