Dhfl Ncd Investment: Where To Invest In India

Non-convertible debentures (NCDs) are a type of debt instrument that companies can issue to raise money for their business. NCDs are long-term financial instruments that cannot be converted into shares or equities. They are issued by corporates to raise funds from the public and offer a fixed return. NCDs are often compared to other investment options such as Provident Fund (PPF), National Savings Certificate (NSC), and Bank Fixed Deposits (FDs). When considering where to invest in NCDs in India, it is important to look at factors such as the track record of the company, its line of business activity, profits, and credit rating. One example of an NCD in India is the Dewan Housing Finance Corporation Limited (DHFL) NCD, which has been in the housing finance sector since 1984.

NCDs are a good investment option for those looking to manage liquidity and risks while earning substantial returns

Non-convertible debentures (NCDs) are a good investment option for those looking to manage liquidity and risks while earning substantial returns. NCDs are long-term financial instruments issued by companies with a promise to pay a fixed interest rate to the investor. They are often used by large companies to raise capital.

NCDs are a good option for investors who want to manage liquidity and risks while earning substantial returns. They are easily tradable and are listed on open stock markets and exchanges. NCDs also offer a fixed interest rate, and investors can receive interest payments monthly, quarterly, half-yearly, or annually. The principal and interest payments are then paid in full upon maturity.

NCDs are considered lower risk because only companies with a good credit rating can issue secured NCDs. NCDs also provide income security and can be sold on stock exchanges. Additionally, no tax is deducted at the source for NCDs, as per the provisions of Sec 193 of the IT Act.

When investing in NCDs, it is important to look beyond the promised returns and focus on the fundamental strength of the issuing company. It is also crucial to check if the NCD issue is secured against some assets of the company and to assess the credit rating of the NCD.

NCDs are a good option for those looking for regular income or looking to enhance returns from their debt portfolio. They offer high-interest payouts, and issues are relatively small, making them attractive to retail and institutional investors. NCDs also provide investors with the option to choose between receiving regular interest payments or a lump sum at maturity through the benefit of compounding.

NCDs are of two types: convertible and non-convertible

NCDs, or Non-Convertible Debentures, are debt instruments that companies use to raise money for their business. They are long-term financial instruments issued by a company for a specified tenure with a promise to pay a fixed interest to the investor. NCDs are of two types: convertible and non-convertible.

Convertible debentures can be converted into shares or equities at a future date. Buying equity shares of a company makes you a shareholder of that company. However, in the case of NCDs, you are only a lender.

Non-convertible debentures (NCDs), on the other hand, cannot be converted into equity or stocks. They are a type of debt instrument that offers a fixed income with varying risk profiles. NCDs have a fixed maturity date, and the interest can be paid along with the principal amount either monthly, quarterly, or annually, depending on the fixed tenure specified. They are also tradable securities, actively traded on the stock market, providing investors with the flexibility to buy or sell NCDs in the secondary market.

There are two types of non-convertible debentures: secured and unsecured. Secured NCDs are backed by the assets of the company, providing a safety net for investors. In the event of a default, debenture holders can claim the specified assets pledged as collateral. Unsecured NCDs, on the other hand, do not have any specific assets pledged as collateral. Investors in these NCDs rely solely on the creditworthiness and repayment capacity of the issuing corporation. Due to the absence of collateral, unsecured NCDs generally offer higher interest rates to compensate investors for the increased risk.

When investing in NCDs, it is important to consider the credit rating of the issuing company, as well as factors such as the level of debt, capital adequacy ratio, provisions for non-performing assets, and interest coverage ratio. NCDs offer potential benefits such as better returns, liquidity, lower risk, and tax benefits compared to convertible debentures. However, it is crucial to conduct thorough research and understand the features and risks associated with each type of NCD before investing.

NCDs can be held by individuals, banking companies, primary dealers, and corporate bodies

Non-convertible debentures (NCDs) are a type of long-term financial instrument issued by companies for a specified tenure, with a promise to pay fixed interest to the investor. NCDs are a popular way for NBFCs and other companies to raise long-term capital through the public issue of shares. They are also a good investment option for those looking to manage liquidity and risk while earning substantial returns.

When investing in NCDs, it is important to consider the type of NCD being offered. There are secured and unsecured NCDs, with the former being backed by the issuing company's assets, providing a safer investment option. The interest rates on NCDs depend on the company issuing them and are generally based on the credit rating of the company.

NCDs are also easily tradable and are listed on open stock markets and exchanges. They provide diversification to an investor's portfolio and offer tax benefits when compared to convertible debentures.

NCDs offer benefits like high liquidity, tax exemptions, and safety

Non-convertible debentures (NCDs) are fixed-income instruments that companies use to raise funds from the public. They are issued by corporates through a public issue and are subsequently traded over the counter (OTC) or on exchanges. NCDs are beneficial for investors as they offer a fixed return and provide high liquidity, tax exemptions and safety.

NCDs are listed on the stock market, making them easily tradable and providing high liquidity. They are issued by companies with a good credit rating, as specified by the Reserve Bank of India (RBI), ensuring safety for investors. NCDs also offer tax exemptions, with no tax deducted at source for those held in Demat form.

NCDs have a fixed maturity date, usually ranging from 1 to 10 years, and the interest can be paid along with the principal amount either monthly, quarterly, or annually. The interest rate on NCDs depends on the company issuing them and is generally based on the credit rating of the company. Secured NCDs, which are backed by the company's assets, tend to offer lower interest rates, while unsecured NCDs offer higher rates.

When investing in NCDs, it is important to consider the credit rating of the issuer, the coupon rate, and the company's asset quality. NCDs with higher ratings, such as AAA+ or AA+, are generally considered safer. Additionally, it is recommended to invest in companies with a good track record, profitable business, and a strong asset base.

NCDs offer benefits such as high liquidity through stock market listing, tax exemptions, and safety, making them an attractive investment option for individuals seeking fixed returns with lower risk.

NCDs carry credit risk, default risk, duration risk, interest rate risk, liquidity risk, inflation risk, and call and reinvestment risk

Non-convertible debentures (NCDs) are long-term financial instruments issued by a company for a specified tenure with a promise to pay fixed interest to the investor. NCDs cannot be converted into shares or equities. They are issued by corporates to raise funds from the public and offer a fixed return.

NCDs carry a number of risks, including:

• Credit or default risk: The issuer's inability to pay interest and/or principal payments due to a weakening of creditworthiness. This can be mitigated by investing in highly-rated bonds.
• Duration risk: The sensitivity of bond prices to changes in interest rates. Higher coupon rates and a higher number of years to maturity result in more price volatility in response to changes in interest rates.
• Interest rate risk: The change in the price of a bond due to changes in interest rates. Bond prices move in the opposite direction to interest rates. When interest rates fall, bond prices rise, and vice versa.
• Liquidity risk: The lack of active trading in a bond may result in illiquidity, where bondholders are unable to find buyers or receive a sub-optimal price on sale.
• Inflation risk: The risk of inflation rising above the coupon rate, resulting in a negative real return. For example, if the coupon rate is 6% and inflation rises to 7%, investors will fall behind inflation by 1%.
• Call and reinvestment risk: The risk of the issuer redeeming the principal prior to maturity, and the investor being unable to find a similar coupon through fresh investment. This is common in a falling interest rate scenario.

NCDs issued by Dewan Housing Finance Corporation Limited (DHFL) are traded on the NSE India.

Frequently asked questions