Manappuram Finance NCD Issue - August 2011

#21
Got full allotment:(

Too bad. Anyway have to hold for 2 years as its for long term.

If we buy from market now then it also would be the same interest rate and same maturity date as got on offer?

Happy Investing!
Yes. if you buy from the market, the same maturity (in fact less since from listing till days the days gone will reduce the total maturity time ) with the same coupon amount.
 

Alchemist

Administrator
Staff member
#22
Why this went on discount? 12% + interest rate. Does market expects the interest to go up more than 12%+ in the next 2 years?
There could be various reasons why these NCDs are trading at a discount.

- Short-term players may have applied for listing gains and sold at a discount to free their money.
- Some investors may have felt that they can get better returns elsewhere and thus exited.
- Buyers may be unwilling to buy the NCDs because they feel the yield at face value is not enough for the risk associated with these NCDs.

If we buy from market now then it also would be the same interest rate and same maturity date as got on offer?
Interest rate (coupon rate) and the maturity of the NCDs are fixed.

These are independent of the market rate of the NCDs.

The yield for the buyer depends on the price at which the buyer buys the NCDs.

Will it go further down or stabilize around today's price?
I think the price should stabilize at current level.
 
#23
Interest payment dates

Where the interest payment dates for mentioned for option -2? As interest will be paid twice a year, does this mean it will be paid once on 1-Apr and then after 6 months on 1-Oct?

Also from which date interest will be calculated - Issue Opening date or Allotment date or Listing Date?

Tried to look in their prospects, but couldn't find. If some has this data , please let me know the source as well.
 

Alchemist

Administrator
Staff member
#24
Where the interest payment dates for mentioned for option -2? As interest will be paid twice a year, does this mean it will be paid once on 1-Apr and then after 6 months on 1-Oct?

Also from which date interest will be calculated - Issue Opening date or Allotment date or Listing Date?
Interest in calculated from allotment date.

I am not sure when the interest will be paid.

From the offer document:

9.2 Calculation of Interest

Series II Bond

9.1.2 Interest on the Series II Bonds at the rate mentioned above will be paid semi-annually from the Deemed Date of Allotment.

9.1.3 For the first six month period, the interest shall be calculated from the Deemed Date of Allotment to the last day of the six month period, both days inclusive.

9.1.4 For the subsequent six month periods (except the six month period in which the Maturity Date falls),the interest shall be calculated from the first to the last day of the six month period, both days inclusive.

9.1.5 For the six month period in which the Maturity Date falls, the interest shall be calculated from the first day of the six month period to one day prior to the Maturity Date, both days inclusive.
 
#27
Confused

If you are thinking of holding till maturity (not going to trade and hence price fluctuations do not matter) , isn't the cumulative interest bond (no regular coupon payments) the best option? Because even though the other coupon paying bonds have higher yields, they are assuming that we re-invest the coupon payments at 12.5% which is not always possible.

On the other hand, cumulative bonds are giving an actual yield of 12%.

Is this thinking right?

PS :- Where can I find the Bonds (and their features) as per their NSE / BSE tickers because I intend to buy some at discount and don't really know what I'm buying just from the ticker names?
 

Alchemist

Administrator
Staff member
#28
Because even though the other coupon paying bonds have higher yields, they are assuming that we re-invest the coupon payments at 12.5% which is not always possible.

On the other hand, cumulative bonds are giving an actual yield of 12%.

Is this thinking right?

PS :- Where can I find the Bonds (and their features) as per their NSE / BSE tickers because I intend to buy some at discount and don't really know what I'm buying just from the ticker names?
Your thinking is correct.

I can't think of any one source where you can find all the details. I may make such a list in future, but it is a time-consuming task.

For most of the recent listing of fixed instruments, The details in their respective threads. Please check them.

For this particular NCD issue, the details can be found in post #10.

If you need details of any particular company's NCDs, post in the respective thread and I will surely get the details for you.
 
#31
What is ex dividend date for this?
As per my knowledge, the interest payment date is 8th March for 2 year bonds. Record date is 3 days before the interest payment date. It is around 1 month left for interest payment date?

But why the price of NCD has fallen by around Rs. 30. I saw 1020 2-3 days back. Right now it is around 990
 
#35
What should we do? The return is very attractive. Only 19 month left for redemption. Should we buy? Or Is it risky?
The management of Manappuram have issued a clarification on the issue here and have called a board meeting on the 10'th of Feb on improving corporate governance and disclosures.

The yield is great,the company is doing very well currently,you may take a small exposure if you can hold until maturity.

The risk here is ,in case of any more adverse news flow,the liquidity may completely dry up making it impossible to exit.

The Muthoot NCD N2(12% Annual,13 Sept. 2013 Maturity) is trading marginally higher and seems attractive too.
 
#36
The management of Manappuram have issued a clarification on the issue here and have called a board meeting on the 10'th of Feb on improving corporate governance and disclosures.

The yield is great,the company is doing very well currently,you may take a small exposure if you can hold until maturity.

The risk here is ,in case of any more adverse news flow,the liquidity may completely dry up making it impossible to exit.

The Muthoot NCD N2(12% Annual,13 Sept. 2013 Maturity) is trading marginally higher and seems attractive too.
The return with Muthoot is also good but the difference is considerable

Around Rs 14 difference in price. Interest rate is also 0.2% less. Interest is paid annually whereas Manappuram pays it semi annually. Maturity date of Manappuram is before Muthoot. Considering only 19th months left for maturity, this difference is more significant.
 
#37
The return with Muthoot is also good but the difference is considerable

Around Rs 14 difference in price. Interest rate is also 0.2% less. Interest is paid annually whereas Manappuram pays it semi annually. Maturity date of Manappuram is before Muthoot. Considering only 19th months left for maturity, this difference is more significant.
Yes, you are correct,the difference in YTM is considerable.

The Reserve Bank doesn't seem very pleased with the rapacious growth in the gold loan segment, so both companies are vulnerable to any forthcoming regulatory action.

Meanwhile ICRA has placed Manappuram on watch.
 
#39
I hope gold loans sector doesn't repeat the microfinance story.
Microfinance loans are generally unsecured and depend more on faith, once the issue was politicized default was pretty much a given.

In the case of Gold Loans, RBI wants to curb the leverage at which these companies operate.

Typically if the tap of liquidity is tightened and lending rates are capped that would make the business much less attractive (lower ROA and ROE).

So while they won't go bust,the current profitability that they are enjoying will soon be history if the RBI stepped in.
 
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