Now as we are here talking about the two NCD options that are on offer. We'll first go into the basics of NCD which are issued by corporate or NBFC firm for raising finances and against them investors get a fixed coupon rate which can be received at intervals. These NCDs can be secured or unsecured in nature, meaning to say may be or may not be backed by the company.
So currently we have Muthoot's Finance and Muthoot Fincorp's NCDs that are open for public subscription. Here we are comparing the two and may probably reach on to know as to which can meet your financial goals.
|Attributes||Muthoot Fincorp||Muthoot Finance|
|Issue details||April 7- April 29||April 8- April 29|
|Type of NCDs||Both secured and unsecured||Secured|
|Yield||8.57-10.20% for unsecured returns are from 9.92-10.2 percent||6.60% to 8.25% per annum.|
|Issue size||Rs. 400 crore||Rs. 1700 crore|
|Rating||CRISIL A+ ( Carry low credit risk, but not as safe as AAA rated instruments)||AA+ ( Over time risk can emanate for the company from may be defaults on gold loan if prices show sharp correction)|
|Liquidity||Hard as the Indian bond market does not offer that much liquidity|
|Minimum application size||Rs. 10000 with each NCD carrying a face value of Rs. 1000||Rs. 10000 with each NCD carrying a face value of Rs 1000|
|Taxation||Interest is taxed as per the investors' slab rate||Interest is taxed as per the investors' slab rate|
But these investments should primarily be opted by investors who can afford to take some risk at the cost of higher return. Also the investment needs to be parked in for a comparably shorter timeframe as the interest rate can then head higher. By and large these investments are not for senior citizens who are concerned on regular income source and should focus on liquidity and safety aspect of the investment.
So, investors going in for either of the two investments need to acknowledge the risk factor which comes inherent in these NCDs.