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L & T Finance taps market with NCDs: Will this work out or not?

Created by : Karthikeyan P S, Associate, ABN Amro  | 08 22 2009 09:15:20 +0000
Industry : Equity Research/AnalyticsFunctional Area : Business Models(Strategy & Execution)
Keywords : investment investment options larsen & toubro l & t l & t infrastructure ncd
Activity:  197 views;  last activity : 07 06 2010 20:18:09 +0000

The issue which aggregates to Rs 500 crore has the option to retain over-subscription up to Rs 500 crore for issuance of additional NCDS, aggregating to Rs 1,000 crore. The NCDS come with four investment options namely.,

a) Quarterly interest payment
b) Semi-annual interest payment,
c) Cumulative interest payment and
d) semi-annual interest payment.

Each of these options come with a different coupon rate of 9.62%, 9.95%, and 10.24 per cent per annum respectively. L&T Infrastructure said that the funds raised through the issue will be used to finance investment activities.

  
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Raising money through debt is always good option for a company as long as it doesn't impact the levergae of the company. I don't know about L & T Finance's financial condition. If there Debt/EQUITY ratio & CAR is within the Industry norms then I think this is a good option considering the current economic scenario where credit off take from banks are little costly.

 
By Deepak Agrawal, Consultant, Independent Consultant  | 08 23 2009 08:25:29 +0000
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According to me There is a good demand for such a product like NCD. The company may raise funds in the future through an equity issue.The funds raised, will be used to lend and invest, and for other operations including capital expenditure and working capital requirements.
By Karthikeyan P S, Associate, ABN Amro  | 08 22 2009 09:15:20 +0000
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