Piramal Enterprises' Debut NCD Issue Presents Investment Opportunity

Piramal Enterprises, a prominent non-banking financial company (NBFC), initiated its first non-convertible debenture (NCD) offering on October 19, catering to a diverse range of investors. Termed 'Tranche I,' this NCD issue aims to raise ₹1,000 crore and includes a greenshoe option for an additional ₹800 crore investment.

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Piramal Enterprises, a prominent non-banking financial company (NBFC), initiated its first non-convertible debenture (NCD) offering on October 19, catering to a diverse range of investors. Termed 'Tranche I,' this NCD issue aims to raise ₹1,000 crore and includes a greenshoe option for an additional ₹800 crore investment.

The NCD subscription period is set to conclude on November 2, with the possibility of an early closure or extension, in line with regulatory guidelines outlined by the Securities and Exchange Board of India Issue and Listing of (Non-Convertible Securities) Regulations 2021.

Piramal Enterprises has defined clear objectives for the utilization of the funds raised. A significant 75% of the proceeds will be directed towards onward lending, financing, and the repayment or prepayment of existing borrowings. The remaining 25% will be allocated to support general corporate purposes.

Investors are offered a variety of tenure options, including two, three, five, and ten years, each offering varying yield rates ranging from 9% to 9.34% per annum. The NCD is slated for listing on both the BSE and the National Stock Exchange (NSE), with the BSE designated as the primary stock exchange.

This NCD issue has received favourable credit ratings, instilling confidence in prospective investors. The minimum application size stands at ₹10,000, equivalent to 10 NCDs, with subsequent investments permitted in multiples of ₹1,000, or 1 NCD.

Key institutions involved in managing the issuance are AK Capital Services Limited, JM Financial Limited, Nuvama Wealth Management Limited, and Trust Investment Advisors Private Limited. IDBI Trusteeship Services Limited has been appointed as the Debenture Trustee, and Link Intime India Private Limited serves as the registrar to the issue.

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While this NCD appears to offer an attractive income opportunity, potential investors should exercise due diligence before committing their funds. The credit rating, a crucial indicator of safety, is favourable, and the interest rates are competitive in comparison to similar-rated NCD issues, promising decent returns.

It's essential to recognize that, like any investment, NCDs carry a degree of credit risk, even those with strong ratings. Moreover, liquidity may be a concern, as NCDs are not as easily tradable as stocks or fixed deposits. Additionally, investors should be mindful of taxation, as the interest earned is subject to income tax at the applicable slab rate.

Investing in Piramal Enterprises' NCD issue presents an opportunity, but it's imperative to consider the pros and cons, emphasizing safety and long-term investment goals.