Shriram City Union Tranche-I April 2019 NCD issue review (Apply)

SCUFL taps debt market after a gap of 5 years.
Issue is rated CARE AA/Stable and CRISIL AA/Stable.
The company has a shelf limit of Rs. 3000 crore.
Investment may be considered for steady regular income

ABOUT COMPANY:

Shriram City Union Finance Ltd. (SCUFL)., which raised four tranches of debt offers in August 2011, September 2012, November 2013 and April 2014, is coming to raise debt funds after a gap of 5 years. Shriram group is a south based investor friendly group. SCUFL is a deposit-taking NBFC under Shriram Group of companies and a prominent financial service conglomerate in India. It offers multiple product offerings including small enterprise/MSME financing, loans against gold, financing for two-wheelers, auto loans, personal loans and housing finance loans. This company is a part of the Shriram Group.

Having commenced operations in 1986, SCUFL has established a pan-India presence, through 1,057 branches as of December 31, 2018 and remain committed to serving unbanked and underserved sections of customer-base.

Shriram City Union Tranche-I

DEBT OFFER DETALS:

For the purpose of onward lending and repayment of interest and principal of existing loans (75% of fund mobilized) as well as general corpus fund need (25% of fund mobilized), SCUFL is coming out with debt offer of Secured and Unsecured Redeemable Non-Convertible Debentures of Rs. 1000 each for Rs. 100 crore with a green shoe option to retain oversubscription to the tune of Rs. 650 crore making the total issue size of Rs. 750 crore (against shelf limit of Rs. 3000 cr.) under Tranche-I.. Issue opens for subscription on 05.04.19 and will close on or before 03.05.19. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. Allotment will be done on 'First come-First served' basis).

This issue is rated as CARE AA/Stable by CARE and CRISIL AA/Stable by CRISIL. These rating indicate that instruments with such ratings are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Issue is jointly lead managed by A K Capital Services Ltd. and Edelweiss Financial Services Ltd, while Integrated Registry Management Services Pvt. Ltd. is the registrar to the issue. Catalyst Trusteeship Ltd. is the debenture trustee.

These NCDs have tenures of 24, 36, and 60 months. It offers coupon rates ranging from 9.26% to 9.75% based on selection of investors. Frequency of interest payments will be Monthly, Annually or cumulative as per the choice of investors. Allotment of these NCDs will be in dematerialized mode only. Application is to be made through ASBA mode only.

Particulars	Series
	I	II	III	IV	V	VI	VII	VIII
Frequency of Interest Payment	Annual	Cumulative	Annual	Monthly	Cumulative	Annual	Monthly	Cumulative
Minimum Application	Rs.10,000 (10 NCDs) across all series collectively
Face Value/ Issue Price of NCDs	Rs. 1,000 per NCD
In multiples of thereafter	Rs. 1,000 (1 NCD) across all series
Tenor	24 months	24 months	36 months	36 months	36 months	60 months	60 months	60 months
Coupon (% per annum)	9.55	NA	9.65	9.26	NA	9.75	9.35	NA
Effective Yield (% per annum)	9.55	9.55	9.64	9.65	9.65	9.74	9.75	9.75
Mode of Interest Payment	Through various modes available
Amount on Maturity (`)	1,000	1,200.15	1,000	1,000	1318.70	1000	1,000	1593.15

With respect to series where interest is to be paid on an annual basis, relevant interest will be paid on each anniversary of the Deemed Date of Allotment on the face value of the NCDs. The last interest payment under annual series will be made at the time of redemption of the NCDs.

FINANCIAL DATA:

For last three fiscals, SCUFL has (on a consolidated basis) posted total revenue/net profits of Rs. 3939.52 cr. / Rs. 552.06 cr. (FY16), Rs. 4656.26 cr. / Rs. 578.09 cr. (FY17) and Rs. 5303.11 cr. / Rs. 687.11 cr. (FY18). For these fiscal ends, it's Net NPAs stood at 1.59%, 1.80% and 3.64% respectively. Thus rise in NPAs is a concern. For the first half ended on 30.09.18 it has earned net profit of Rs. 475.79 cr. on a total revenue of Rs. 3861.36 cr. Post issue, its current debt equity ratio of 3.65 ( as on 30.09.18) will stand enhanced to 4.13.

As on 30.09.18, SCUFL has a paid up equity capital of Rs. 66 crore and a net worth of Rs. 5835 cr. and AUM of Rs. 27335 cr.

Conclusion / Investment Strategy

Considering rating, and standing of this group in the southern region, issue is worth considering. Investors may consider investment for long term for steady income. (Subscribe).

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on April 4, 2019

The Shriram City NCD April 2019 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Shriram City NCD April 2019 worth investing. The Shriram City NCD April 2019 Note sets the NCD expectations in systematic way which tells you if Shriram City NCD April 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Shriram City NCD April 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Shriram City Union Tranche-I April 2019 NCD issue review (Apply)

Conclusion / Investment Strategy

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