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- Stock Market And Fixed Deposits Alternatives; Invest In Non Convertible Debentures (NCDs) Bonds In India
Mumbai13 minutes agoAuthor: Ajit Singh
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Money in NCDs is fixed for a long time. In such a situation, if the interest rates increase in the future, then it may be that the interest rates on NCDs will get lower as of today.
- The issue of Piramal Capital will close on July 23
- IIFL’s issue will close on July 28
The stock market is at a new high. Investing in this situation is risky. Fixed deposit (FD) rates of banks or companies are at a lower level. Here you will get less interest. In this case, you can invest in Non Convertible Debentures (NCDs) of two companies. Here you will get interest up to 10% per annum.
Piramal Capital’s issue will open on 12
Let’s talk about NCD of Piramal Capital and Housing Finance. The issue will open on July 12 and close on July 23. Its face value is Rs 1,000. You have to apply for at least 10 thousand rupees. That is, 10 NCDs have to be bought. The allotment will be on first come, first served basis. In this, you will get interest at different rates.
8.37% interest for 26 months
For example, if you invest for 26 months, then you will get an interest of 8.10 to 8.37% annually on this. For 36 months it will be 8.25 to 8.50. For 5 years you will get 8.50 to 8.75% interest and for 10 years you will get 8.75 to 9% interest. ie banks FD It is about 40% more than that.
plan to raise 200 crores
The company will raise Rs 200 crore through this. However, if more applications are received, the company can increase it to Rs 800 to Rs 1,000 crore. CARE and Icra have rated it AA. The NCDs will be listed on both the major exchanges. Piramal Capital & Housing Finance is a subsidiary of Piramal Enterprises. It does not have the right to take deposits from the Reserve Bank. It is a housing finance company.
IIFL issue opens on 6
Similarly, IIFL has also launched NCD. It is open on 6th July and will close on 28th July. Although it is an unsecured NCD. Its face value is 1 thousand rupees and at least 10 thousand rupees will have to be invested. With this the company wants to raise Rs 100 crore. It can also increase it to Rs 900 to Rs 1,000 crore if more applications come. The company has set a target of raising Rs 5 thousand crore through this in various phases.
CRISIL has rated it AA stable. BWR has rated AA negative. The company has announced an interest of 10% in 87 months time. It will also be listed on both the stock exchanges.
What is NCD
Actually corporates use this route from time to time to raise money. This is the way to invest like any post office or other. It has a fixed opening and closing date between which you can buy it. You get fixed interest on it. There is no ups and downs in it. When companies need money, they issue it. Interest is earned on it at different rates.
is there any risk
Yes, there is a risk involved when a company goes bankrupt or goes away. For example, due to bankruptcy of companies like Anil Ambani’s Reliance Capital, DHFL, investors’ money got stuck. Also, IIFL has an unsecured NCD, which keeps the risk. However, the risk in NCDs of good corporate houses is low.
why should you invest in it
In fact, the interest rates on FDs are currently between 5-6 per cent. The stock market is at its height. Also, if you invest directly in the market, then there is a risk. So at this point you have two options. Either you do SIP in mutual funds on a month to month basis or you can keep money in such NCDs for some time and earn more than FDs. Keep in mind that money in NCDs is fixed for a long time. In such a situation, if the interest rates increase in the future, then you may get the interest rates on NCDs lower as of today.