Mahindra Financial

Issue Date: 04th Jan – 25th Jan 2018
Issue Size: Rs. 3500 crore

Company Background

Incorporated in 1991, Mahindra & Mahindra Financial Services Ltd is one of the leading non-banking finance companies (NBFC) with customers primarily in the rural and semi-urban markets of India. The Company is a part of the Mahindra group, which is one of the largest business groups in India.

It is primarily engaged in providing financing for new and pre-owned auto and utility vehicles, tractors, cars and commercial vehicles. It also provides housing finance, personal loans, financing to small and medium enterprises, insurance broking and mutual fund distribution services. Mahindra runs an extensive network of 1,296 offices spread across 27 states and 5 union territories.

In addition the company, among other services, provide wholesale inventory financing to dealers and retail-financing to customers in the United States for the purchase of Mahindra group products through Mahindra & Mahindra Financial Services USA LLC, its joint venture with a subsidiary of the Rabobank group.

Mahindra & Mahindra Financial Services NCD Jan 2019

Mahindra Financial Services are issuing secured, un-secured sub-ordinated, redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 500 Crores with an option to retain another Rs 3,000 Crores over subscription totaling to Rs 3,500 Crores. It comes with 4 different options, which contains 39 months, 5 years, 8 years and 10 year tenure.

They are offering secured and unsecured NCD’s now for Jan 2019. For un-secured NCD the assets are NOT backed up for principal and interest. In case something happens to company performance and company is closed, investors would be given normal preference in repayment of capital and interest.

Issue Details

Issue Opens04-Jan-19
Issue Closes25-Jan-19
Issue Size(Rs in Crore)3500
Face value(Per NCD)Rs. 1000
Minimum Application SizeRs 10,000 (10 NCDs)
Market Lot1NCD
Effective Yield Upto9.50% per annum
Credit RatingCARE AAA; Stable
IND AAA; Stable
Coupon TypeFixed coupon rates
Listing Date13-Feb-2019

The interest rates on the Jan 2019 NCD’s of Mahindra & Mahindra Financial Services

Issue Breakup

Objects of the Issue:

The Company proposes to utilise the funds which are being raised through the Issue, after deducting the Issuerelated expenses to the extent payable by the Company (“Net Proceeds”), estimated to be approximately Rs 347,853.20 lakhs, towards funding the following objects.

1. For the purpose of onward lending, financing, refinancing the existing indebtedness of our Company, long term working capital; and

2. General Corporate Purposes (upto 25%)

How to apply Mahindra and Mahindra Financial Service NCD 2019?

You can apply these NCDs in demat form only. If you have demat account, you can login to your account and go to IPO/NFO/NCD section and apply for the same.

You can apply online by ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work. In case you don’t want to do it online, you can download the application form from company site or Financial Institutions and submit to collection centers.

Our View

Mahindra Finance NCDs offers High Interest rates. Secured NCDs are somewhat better as compared to unsecured. The main risk with NCDs is default risk. The issuer may not be able to pay the interest payments. NCD Issuers normally do not default, especially the top business group, but when things go drastically wrong, they may face problem in paying the investors. If you are willing to invest and you are a high risk taker even after IL&FS Scam, you can consider investing in NCDs. When investing in NCDs, do not invest your entire investible surplus or savings in one NCD issue alone.