Monday, August 8, 2011

Shriram City Union Finance NCD - Analysis, Review, Recommendation

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Shriram City Union Finance (SCUF), a Chennai based NBFC has come out with a Rs 750 crore Non convertible debenture (NCD) issue. The company plans to raise Rs 375 crore through this issue and also has a green-shoe option to retain oversubscriptions of an equal amount.

SCUF was incorporated in 1986 and is a part of the Shriram Group that grew out of a chit fund business. The company is the country’s biggest lender to small enterprises requiring loans of up to Rs 10 lakh and is also present in other segments like two-wheeler finance, loans against gold and existing two-wheelers, and financing white goods.

The Shriram City Union Finance NCD issue may open on 11th August 11 and shall close on 27th August, 2011. , will let investors choose between the 3 years and 5 years tenor options and will carry a coupon rate of up to 12.10 per cent per annum. The issue has a call and put option, that can be exercised after four years. This means, an investor can surrender his investment while the issuer can also withdraw the issue after four years. 

SCUF plans to use the proceeds of the issue in regular financing business and repaying debt. The company’s net profit rose from Rs. 52 crore FY2007 to Rs. 241 crore in FY11. The company’s assets under management grew from Rs. 2,507 crore to Rs. 7,998 crore during the same period. The capital adequacy ratio stood at 20.53% as on March 31, 2011.

SCUF NCD will be listed on both BSE and NSE. JM Financial Consultants, A. K. Capital and ICICI Securities are managing the issue as lead managers.

Click here to see Shriram City Union Finance NCD Allotment status!
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