BSE - Greenex

Source – Business Today

The country's premier stock exchange BSE on Wednesday launched 'BSE-Greenex', the first environmental friendly equity index, which will enable investors take more informed decisions in the green theme of India.

BSE in association with gTrade (supported by GIZ promoted by Germany, Observer Research Foundation and IIM Ahmedabad) has constructed BSE-Greenex, designed specifically to promote green investing, with emphasis on financial performance and long-term viability of companies. It is based upon purely quantitative and objective performance signals to assess carbon performance.

BSE-Greenex includes top 20 companies based on Green House Gas Numbers, Free Float Market capitalisation and turnover. These companies include Tata Steel, SBI, L&T, ICICI Bank, Tata Motors, Sun Pharmaceuticals, NTPC, Dr Reddy's Labs, HDFC, Bharat Heavy Electricals, GAIL, Hindustan Unilever, Cipla, Sterlite Industries, Tata Power, Ambuja Cements, Lupin, DLF, Glaxosmithkline and Reliance Infrastructure.

Team CrawFin/ Harshal Jawale, CFP

Other Index details ---

Launched – 22 Feb, 2012

Launch Price – 1500

Current Market Price – 1475 (as on 23^rd Feb)

P/E – 18.9

P/B – 2.9

Turnover – above 200 Crore daily

Since there is no other incentive to companies to be a part of this index, I do not expect any price improvement in the stock prices or index. Investment is advisable only if one wish to purchase this basket of stocks instead of Sensex or Nifty or any other basket. Launch of green theme by MF houses may attract investments into these stocks thereby resulting price improvement in future.

“Wealthy Investment needs Healthy Methods”

MCX IPO – Worth a bet

Team CrawFin/ Harshal Jawale, CFP^CM

The Multi Commodity Exchange (MCX), India's biggest commodity exchange by turnover is entering the market with an offer for sell from existing investors like FTIL, SBI, Corp Bank etc. Incorporated in 2003, MCX is the largest among these and have above 80% of the market share of the Indian commodity futures exchange industry. It allows trading in more than 50 commodities across sectors like bullion, metals, energy, weather, and agricultural products. MCX has more than 2,107 registered members operating through over 180,000 trader work stations in over 1,139 cities across India. MCX emerged as the 5th largest exchange in the world.

Issue Details –

Open – Feb 22, 2012 – Feb 24, 2012

Price band – INR 860 – INR 1032

Market Lot – 6 Shares

Size – INR 552 Cr – INR 663 Cr

CRISIL Rating – 5/5

Valuation post listing (Assuming issue close at higher price i.e. 1032)

Market Capitalization – INR 5200 Cr Approx

P/BV – 5 times

PE – 18 times (FY12 earning expected at 57)

CAGR – 33% for last 5 years; Expected growth is CAGR 25% for next 3 years

Cash in hand – INR 700 Cr

Dividend yield – 1% expected

Considering all the existing valuation parameters I feel IPO is priced at par. Yet its market leadership, nascent stage of commodities market in country like India, its future plans of entering into equity segment and consistent addition of new products will find high growth in near future. I recommend subscribe to IPO as a good value portfolio addition but do not expect bumper listing.

NHAI/ PFC – Tax Free bonds

Team CrawFin/ Harshal Jawale, CFP^CM

Nav-Ratna Government companies offering tax free bonds (on interest) to resident individuals, NRIs and corporate; offers excellent opportunity to park cash in safe mode.

Features of Tax Free Bonds ---

1. Tax benefits u/s 10 clause (15) of the Income Tax Act, 1961 – the interest received on such bonds are tax free in nature.
2. Credit Rating(s) of CRISIL AAA/Stable, CARE AAA & FITCH AAA (ind)/Stable for existing outstanding bonds. Instruments with this rating are considered to have the highest degree of safety in terms of timely servicing of financial obligations.
3. Bonds to be allotted on first-cum-first serve basis up to the issue size of relevant tranches
4. Bonds are to be issued either in demat form or physical form at the option of bondholders. Bonds are proposed to be listed on the BSE and the NSE. (PFC will be listed only on BSE)

Issue Details

Face value/bond = INR 1000

Minimum Application Size = INR 50000 i.e. 50 bonds (For PFC Min app size = INR 10,000)

Type of bond = Tax Free Secured Redeemable Non-Convertible Bonds in the nature of Debentures

Tenure = 10 years and 15 years

Interest rate = 8.2% (10 yrs) & 8.3% (15yrs)

Interest payment = Annual

Issue opens on = December 28, 2011 (For PFC December 30, 2011)

Issue closes on = January 12, 2012 (For PFC January 16, 2012)

These bonds are highly recommended for people who pay tax on Bank Fix deposits.

Do you know – HDFC Ltd offers 10% interest on its platinum fixed deposit. For more details read http://crawfin.blogspot.com/2011/10/hdfc-platinum-deposits-10-pa.html

Muthoot Finance Limited (NCD) – 13% plus Fix returns

Team CrawFin/ Harshal Jawale, CFP^CM

Source – Business Line

Apart from attractive rates, the secured nature of Muthoot's lending (loans against gold) offers some margin of safety in terms of loan to value, investment grade rating (CRISIL AA-) and strong track record with 70 years of experience in gold financing business support the investment. An AA- rating is defined as carrying “very low credit risk”.

Investors can avoid the three year and five year instruments as the 0.25 percentage point higher than the two year rate of interest doesn't really make up for the risks of holding on for a longer tenure.

ABOUT THE COMPANY

Gold loans account for 99 per cent of Muthoot's assets under management with predominant exposure to South India. It has a low proportion of non-performing asset (gross NPA ratio of 0.31 as of June 2011) thanks to gold as collateral. Muthoot has made profits in at least last seven fiscal years. It has 120 tonnes of gold against which it lent at average loan-to-value of 72 per cent. The issue also gives comfort from the gold price movement perspective. Gold prices may continue to remain firm for some time given its safe haven status.

The assets under management are close to Rs 18,000 crore. The interest spreads (difference between interest earned and interest expended) of Muthoot was 10.9 per cent for the quarter ended June 2011. The company has been raising money from retail investors for quite some time through private placement of secured NCDs. As of June 2011, retail NCD borrowings accounted for 26 per cent of overall borrowing. The capital adequacy ratio of Muthoot is strong at 19.2 per cent as of June 2011 as against mandatory requirement of 15 per cent.

Issue opening date – 22 Dec 2011

Issue Closing date – 7 Jan 2012

Issue size – INR 300 Crore with an option to retain oversubscription upto INR 300 Crore aggregating to a total of INR 600 Crore.

Instrument – Public issue of Secured Non- Convertible Debenture (NCD)

Ratings – AA-/Stable by both Crisil & CARE

Face Value – INR 1000/NCD

Minimum Application – 5 NCD = INR 5000

Listing - BSE

Coupon Rate %	I	II	III	IV (Yield)
	13%	13.25%	13.25%	13.43%
Tenor	24 Months	36 Months	60 Months	66 Months
Interest Payment	Annual	Annual	Annual	Cumulative

A WORD OF CAUTION

Muthoot Finance is the fifth non-banking finance company (NBFC) to come up with a public issue of NCDs in the last couple of months. It is also fourth company in as many weeks to hit the market with secured NCD issue. Given such high dose of NCD issuances, investors should avoid allocating too large a portion of their portfolio to such NCDs.

HDFC Platinum Deposits @10% pa

HDFC Platinum Deposits – 3 Decades of excellence

Team CrawFin/Harshal Jawale, CFP^CM

With consistent performance for over three decades, HDFC Ltd. has earned its credibility from over 10 lakh depositors.

Interest Rates – 9.5 -10% for Individuals, 0.25% extra for Senior Citizens

Minimum Amount – INR 20,000

Duration – 15, 33, 60 months

Options ---

1. Monthly Income Plan - monthly interest payout
2. Non-Cumulative Plan – quarterly/ half yearly
3. Annual Income Plan – yearly
4. Cumulative Plan – lump sum

Best Option – Platinum Cumulative option for 15 months with 10%/pa Interest rate.

Depositor can benefit from -

1.             Highest Safety - AAA rating from both CRISIL and ICRA for 17 consecutive years
2.             Attractive & Assured Returns
3.             A wide range of deposits products to choose from
4.             Quick Loan against Deposit facility

Resident Individual Investors ---

Depositors can choose from a wide range of deposit products with maturities ranging from 12 to 60 months at competitive rates of interest and with different features to suit the investment needs of individuals. Senior citizens who are 60 years and above are offered an additional 0.25% p.a. on all deposit products

NRIs ---

Deposits from Non-Resident Indians and Persons of Indian Origin resident outside India holding PIO Card are accepted in accordance with the regulations governing the acceptance of deposits from NRIs. Depositors can choose from a wide range of deposit products with maturities ranging from 12 to 36 months at competitive rates of interest and with different features to suit investment needs of individuals. Senior citizens who are 60 years and above are offered an additional interest of 0.25% p.a. on all deposit products

Our Assessment –

With HDFC Ltd track record, its rating and interest offering at 10% is very attractive as against any bank deposit (9.25-9.6%) as on date. Only Company Fixed deposits are offering higher interest in the range of 10.75-12%/pa today with higher interest with high risks.

We recommend strong buy on HDFC Platinum deposits instead of any bank FD or PPF investments for some time i.e. as long as high interest remains.

Mahindra Finance FD

Mahindra Finance Samruddhi Fixed Deposit Scheme

Team CrawFin/ Harshal Jawale CFP^CM

Crisil Rating – FAAA (Highest Safety)

Minimum Amount – INR 10,000 for cumulative, INR 25,000 for Non-cumulative

Additional amount multiples – INR 1,000

Interest Payment – Quarterly, Half-yearly, Cumulative

Mode of Interest Payment – ECS/NEFT only

	Cumulative		Non-Cumulative
Period (months)	Interest p.a.	Effective Yield p.a.	Interest pa (half-yearly)	Interest pa (Quarterly)
12	9.5%	9.5%	9.25%	9.15%
18	10%	10.33%	--NA--	--NA--
24	10.25%	10.78%	10%	9.9%
36	10.50%	11.64%	10.25%	10.15%
48	10%	11.60%	9.75%	9.65%
60	10%	12.21%	9.75%	9.65%
Min Amt	INR 10,000		INR 25,000	INR 50,000

** Senior Citizen/ Employees will get 0.25% additional rate p.a.

• All communications with regard to Fixed Deposit should be addressed to the Fixed Deposit Processing Center at Mahindra & Mahindra Financial Services Limited 15, Arcot Street, Opposite M.G.R. Memorial House, T. Nagar, Chennai-600017
• Please note that Company FD is not breakable, Bank FD can be withdrawn with some penalty. Also Bank FD provides Insurance of up to INR 100,000.
• Other details like KYC, Nomination, Loan against FD, Taxation remains same as Bank FD.

Our Assessment

Company FDs are illiquid in nature, but it offers 0.75% to 1% higher rate of interest as against Bank FD. Some reputed companies like JP Associates and Unitech are offering higher interest rates in the range of 11.5-12.5% pa.

I recommend M&M Finance FD (with highest safety rating) for someone who intends to stay in fixed interest asset class. Although major part of their money should be invested into bank FDs, some part of investment into Company FD for higher returns would be a wise option.

Other Company FD Schemes ---

JP Assoc – 11.5%

Unitech – 12%

HDFC Ltd – 9.75%

Dewan Housing Finance Ltd – 10.25%

Shriram Transport Finance – 10.75%

IFCI Long Term Infrastructure Bonds – SERIES III

Team CrawFin/ Harshal Jawale, CFP^CM

Our Assessment -

Infrastructure bonds were introduced in the last financial year by the Finance Minister to offer tax benefit on the investment of upto Rs 20,000 u/s 80CCF. IFCI is one of the oldest financial Institutions who are engaged into offering such bonds.

Coupon rate has been increased from 8% last year to 8.5% this year. Although it is not very attractive as against Bank FD (Interest rate 9.5-10%) or PPF (even maturity amount is non-taxable); it is worth due consideration for someone who is paying even Rs 500 tax after exhausting Rs 1Lkh limit u/s 80C.

The indicative yield for the option I is 8.5%, 9.65%, 10.95%, 12.44% for zero tax slab, 10% tax slab, 20% tax slab and 30% tax slab respectively. If you sell this bond post 5 years lock in period through BSE or under buyback mode, your yield will move higher. For instance if you are in 30% tax slab and goes through buyback mode after 5 years your yield will be around 16.52% pa. This happens because 30% tax benefit that you receive spreads through lesser time now i.e. 5 yrs against 10 yrs in previous case.

In my view it is a screaming buy if your tax slab is 20% or higher else you have enough options to make investment decisions safest and most favorite being Bank FD at 10% pa interest rate.

Other Details –

Deemed date of allotment – 12, December 2011

Listing – on BSE

Benefits – Tax exemption u/s 80CCF up to investment of Rs 20,000

Options	I	II	III	IV
Interest Payment	Cumulative	Annual	Cumulative	Annual
Tenor	10 yrs	10 yrs	15 yrs	15 yrs
Face Value (Rs/Bond)	Rs 5000
Issue Price	At par
Terms of Payment	Full Amount with Application
Coupon (% pa)	8.5% pa (Compounding)	8.5% pa	8.75% pa (Compounding)	8.75% pa
Coupon Payment date	At the time of redemption	12, Dec. every year	At the time of redemption	12, Dec. every year
Maturity Date	Dec. 12, 2021		Dec. 12, 2026
Buyback Option	Yes	Yes	Yes	Yes
Buyback Dates	Dec 12 of 2016 and 2018		Dec 12 of 2016 and 2018
Buyback Intimation	August 12 to September 11 of  years 2016 and 2018		August 12 to September 11 of  years 2016 and 2018
Redemption Amt (Rs/Bond)	11305/-	5000/-	17596/-	5000/-
Redemption Amount if buyback exercised (Amount in Rs)
End of year 5	7519/-	5000/-	NA	NA
End of year 7	8851/-	5000/-	8995/-	5000/-
End of year 10	NA	NA	11569/-	5000/-
End of year 12	NA	NA	13682/-	5000/-
Lock-in Period	5 years from deemed date of allotment