Dewan Housing Finance Limited (DHFL)
DHFL is a housing finance company which is headquartered in Mumbai and has branches in all major cities across India. It has been in operations for last 34 years. Its long-term bank loan programme is rated [ICRA]A(SO) and short-term is rated [ICRA]A1+ by ICRA Limited.
What are NCDs?
NCDs are long-term financial instruments used by corporate to raise funds for long-term through the public or private issue. They come with a fixed tenure and interests on them are paid monthly, quarterly or annually.
DHFL AAA Rated NCD Issue
The company is raising funds from a public issue of secured redeemable non-convertible debentures (NCDs). These NCDs will be listed on stock exchanges so if you are holding them in dmat form they could the traded. Though they come with a fixed tenure but could be traded on NSE or BSE which will provide liquidity for its investors.
Some highlights of DHFL NCDs
- They are offering interest rates up to 9.1% per annum for 7-10years of deposits.
- DHFL NCDs are secured financial instrument.
- TDS is not applicable to them through short-term/long-term capital gains tax applies if sold before or after 1 year.
- They have a rating BWR FAA by Brickwork and AAA by Care.
- Interest on NCDs is paid monthly/quarterly/annual basis.
- The minimum investment is ₹10,000 (10 NCDs), thereafter in multiple of ₹1,000.
- They offer liquidity and could be traded on exchanges.
Should you apply?
Currently, interest rates offered by banks are between 6-7.5% which is also taxed based on an individual income tax slab. Interest rates offered by DHFL is around 8.9% (annual interest payout) for 3-5 years which is taxed under short-term/long-term capital gain tax.
Considering volatility in Equity and other debt instruments DHFL NCDs are quite safe and offer attractive interest rates. Investors who have a medium-term horizon and who want risk free income could apply for DHFL NCDs.
When to apply?
DHFL NCDs will open between May 22 to jun 04, 18. They could be applied using ASBA facility through the internet banking of any bank.
Brief about the Issue?
This is a ₹3000 crore issue with a green shoe option of 9000 crores. It is part of the company fundraising plan of ₹50,000 crores for FY 2018-19.