Tuesday, November 26, 2013

NTPC TAX FREE BONDS - AAA Ratings - EXPECTED IN THE FIRST WEEK OF DECEMBER,2013

NTPC Tax Free Bonds

National Thermal Power Corporation Private Limited (NTPC) is a public sector Government Company which has been granted a Maharatna Status.

NTPC is one of the largest power producers in India in term of both capacity and generation, with aggregate installed capacity of 41,184 MW, representing market share of 18.44% of India’s total installed capacity as on March 31, 2013.


In calendar year 2013, they have been ranked as the number one independent power producer (IPP) and energy trader in the world on the basis of asset worth, revenues, profits and return on invested capital.

In fiscal 2013, the company total revenue aggregated to 72,540.79 crore and 68,775.51 crore on consolidated and standalone basis respectively.

ISSUE HIGHLIGHTS ( Tentative) 

The Current interest rate levels offer a great opportunity for investors to lock in higher accruals. Tax free bonds represent one of the better options to execute the same, particularly for investors looking for long term accruals. Pursuant to the CBDT Notification, the Company proposes to raise up to 1,000 crore with an option to retain oversubscription up to 750 crore for issuance of additional Bonds aggregating to a total of up to 1,750 crore during fiscal 2014. 

The rating of the company is AAA Stable by ICRA and Crisil which represents highest safety.

Issue Opens: December 3, 2013
Issue Closes: December 16, 2013
Issue Price: 1000 per Bond
Minimum Application: Rs 5000(5 bonds).

Coupon details :-

Coupon Details
10 Yr
15 Yr
20 Yr
Others*
Retail**
Others*
Retail**
Others*
Retail**
8.41%
8.66%
8.48%
8.73%
8.66%
8.91%
Comparison with FD s on notional Pre-tax interest
Tax slab
10 Yr
15 Yr
20 Yr
10.30%
9.38%
9.65%
9.45%
9.73%
9.65%
9.93%
20.60%
10.59%
10.91%
10.68%
10.99%
10.91%
11.22%
30.90%
12.17%
12.53%
12.27%
12.63%
12.53%
12.89%


*Others include QIBs,Corporate and HNI (application amount above Rs 10 lacs)

**Retail Option for individuals if application is for 10 lacs or less.

WHY INVEST IN Tax Free Bond(TFB) :-​
TFB appeal to investors who are looking for fixed and safe returns keeping the risk level low  as that of a Bank FD.

1. Tax Free Interest: TFB scores over a FD since the Interest is tax free in the hands of investors (TDS is not deducted on interest). It is not included in the total income while filing income tax returns (under section 10(15)(iv)(h) of the Income Tax Act, 1961).

2. Safety : TFB are issued by PSUs and come with the high credit rating.

3. Market Timing : Interest rate in India is very attractive at this juncture. This issuance is likely to offer higher yields than other tax free bonds issued in the last few years and therefore offers an opportunity to lock on to high interest rates for long durations upto 20 years.

4. Tradable: Listed on stock exchanges, freely tradable on stock exchange(s).


5. Format : Option of holding bonds in 'Demat Form' as well as ‘Physical Form’ ‐ easy to handle & monitor.