Is it good to invest in NCD?

NCDs may offer a high-interest rate ranging from 7% to 9% if held till maturity . Interest payouts are either monthly, quarterly, half-yearly or annually. NCDs do offer a cumulative payout option, as well. Moreover, unsecured NCDs can offer a higher interest rate.

How to invest in NCD IPO?

NCD issue process is similar to the IPO process Investors apply for NCD shares through a broker. Based on the subscription, they receive the number of NCD shares. The NCD's are credited to the demat account and the money gets deducted from the trading/bank account. More items... Feb 14, 2024

What happens to NCD on maturity?

On maturity, the investor will get back the principal amount along with interest . Since NCDs are not backed by collateral, but just the creditworthiness of the issuer, ratings given by credit rating agencies become important.

What is the disadvantage of NCD?

Disadvantages of NCDs Most NCDs are not callable, meaning the bank cannot redeem the instrument prior to the maturity date . However, if a bank can call the NCD, it will do so when interest rates fall. Hence, investors will have difficulty finding another NCD that pays a similar rate of interest.

Unsecured NCDs provide higher interest rates as they are not backed by the company's assets but are riskier than secured NCDs based on protecting investors' investments. The decision to choose between secured and unsecured NCDs are based on your set financial goals and the risk profile.

What is the interest rate for NCDs?

Interest - NCDs may offer a high interest rate ranging from seven per cent to 10 per cent if held till maturity. The interest rates vary based on the ratings of the NCDs. E.g. - A highly rated NCD may offer between seven to nine per cent whereas risky NCDs offer a return in the range of 10-13 per cent.

What is the difference between a IPO and a NCD?

With a debt IPO, the company issues debt instruments such as Non-Convertibles Debentures (NCD), whereas with an equity IPO, the company issues shares . Definition: In the case of debt IPO, capital is raised by borrowing money from the public.

Is NCD better than FD?

NCDs carry a higher risk than FDs , as their safety and returns depend on the issuer's creditworthiness. Before investing, it's essential to research the issuing company's credit rating and financial stability.

What is the return of NCD?

Interest - NCDs may offer a high interest rate ranging from seven per cent to 10 per cent if held till maturity. The interest rates vary based on the ratings of the NCDs. E.g. - A highly rated NCD may offer between seven to nine per cent whereas risky NCDs offer a return in the range of 10-13 per cent .

Is JM financial NCD safe?

Ratings by CRISIL and ICRA indicate 'High degree of safety' The NCDs have been rated "CRISIL AA/STABLE" by CRISIL for an amount upto Rs.

10% Arka Fincap NCD Dec-2023 issue – Should you Invest? (2024)

Arka Fincap NCD Dec-2023 issue – Introduction

Arka Fincap Ltd (erstwhile Kirloskar Capital Ltd) has come up with a secured NCD issue that will open for subscription on December 7, 2023. Arka Fincap Limited is an NBFC primarily engaged in providing structured term financing solutions in India. These NCDs offer interest rates of up to 10% and are issued in 6 different series with a tenure of 24 to 60 months. Should you subscribe to the Arka Fincap NCD issue of the December 2023? What are the risk factors one should consider before investing in such high-risk NCDs?

Also Read: Muthoot Mercantile Dec-23 NCD offers 10.5% interest rates

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About Arka Fincap Limited

Company is a NBFC-ML registered with RBI. They are a professionally managed organization part of the Kirloskar Group, primarily engaged in providing structured term financing solutions to corporates, real estate and urban infra financing, loans to micro, small and medium enterprise and personal finance loans to borrowers in India.

Arka Fincap NCD Dec-2023 – Issue Details

Here are the details of Arka Fincap NCD Tranche-I issue.

Subscription opening Date	07-Dec-23
Subscription closure Date	20-Dec-23
Issuing Security Name	Arka Fincap Limited
Security Type	Secured, Rated, Listed, Redeemable, Non-Convertible Debentures
Issue Size (Base)	Rs 150 Crores
Issue Size (Option to retain over subscription)	Rs 150 Crores
Total issue size	Rs 300 Crores
Issue price	Rs 1,000 per bond
Face value	Rs 1,000 per bond
Series	Series I to VI
Minimum Lot size	10 bonds and 1 bond there after
Tenure	24, 36 and 60 Months
Interest Payment frequency	Monthly and Annual
Listing on	Within 6 working days on BSE
Lead Manager	JM FinancialLimited and Nuvama Wealth Management Limited
Debenture Trustee/s	Catalyst Trusteeship Limited

Arka Fincap NCD Dec-2023 – Interest Rates

Series	I	II	III	IV	V	VI
Frequency of Interest Payment	Quarterly	Annual	Quarterly	Annual	Quarterly	Annual
Tenure (Months)	24	24	36	36	60	60
Coupon (% per Annum)	9.00%	9.30%	9.30%	9.65%	9.65%	10.00%
Effective Yield (% per Annum)	9.29%	9.29%	9.62%	9.64%	9.99%	9.99%
Amount on Maturity (In Rs.)	1,000	1,000	1,000	1,000	1,000	1,000

Arka Fincap NCD Credit Ratings

These NCDs are rated as CRISIL AA-/Positive Outlook by CRISIL Ratings Limited.

These ratings indicate that instruments with this rating are considered to have a high degree of safety regarding the timely servicing of financial obligations and carry very low credit risk.

Arka Fincap Limited – Financials

Period Ended	31-Mar-22	31-Mar-23
Revenue	203.09	372.88
Profit After Tax	32.51	61.36

Arka Fincap NCD Dec-2023 – Why to invest?

These NCDs offer attractive interest rates of up to 10%, providing a yield of up to 10% per annum. Currently, banks and financial institutions are offering lower rates in comparison, making these NCDs an appealing investment option.
The company has good revenue and margin growth in the past. Investors are advised to consider NCDs from companies that are growing in terms of revenues and margins.
These NCDs are available in 6 different series, giving investors the flexibility to choose a series that best suits their preferences

Also Read: 10.5% IIFL Samasta Finance NCD Dec-2023 issue

Arka Fincap NCD Dec-2023 – Risk Factors

Here are the risk factors of investing in these bonds.

Any downgrade in its credit ratings may increase interest rates for raising new debt, refinancing its outstanding debt which would increase the financing costs of the company.
Its customers may default in their repayment obligations, which may result in increase in the levels of Gross Stage 3 assets in its AUM and that could have an adverse impact on its business.
Its Loan Book comprises of unsecured loans. Its inability to recover the amounts due from customers in connection with such loans in a timely manner could adversely affect its operations and profitability.
Its business requires substantial capital, and any disruption in funding sources would have a material adverse effect on its liquidity, cash flows and financial condition.
They are vulnerable to the volatility in interest rates, and may face interest rate mismatches between its assets and liabilities in the future which may cause liquidity issues.
Investors are advised to refer to the Arka Fincap NCD Dec-23 RHP prospectus for a complete understanding of the risk factors.

Arka Fincap NCD Dec-2023 – Should you Invest?

Arka Fincap NCD Tranche-I offers high-interest rates up to 10%, which are higher than the current interest rates offered by banks and financial institutions. These secured NCDs provide preference to NCD investors in the event of any financial crisis or company shutdown, ensuring prioritized payment of interest and capital repayment. Rated as AA- by CRISIL these NCDs hold a favorable rating.