The first tranche of infra bond issue offered by IDFC has received a tepid response, with the company so far collecting only around Rs 500 crore or 10% of its ambitious target of Rs 5,000 crore for FY12. This means, the company will have to tap retail money more aggressively to achieve its target in the next tranches, market sources told.
The first tranche of infrastructure bond issue offered by Infrastructure Development Finance Company (IDFC) has received a tepid response, with the company collecting only around Rs 500 crore, an official at one of the lead managers to the issue told moneycontrol.com. The infrastructure financing major is looking to raise Rs 5000 crore through infra bonds in financial year 2011-12.
This means, the company will have to tap retail money more aggressively to achieve its target in the next one or two tranches.
The IDFC infra bond issue, offering 9% interest, had opened for subscription on November 21 and closed on December 16. In 2010-11, IDFC had collected Rs 1,464 crore through infra bonds as against the target of Rs 3,400 crore (inclusive of oversubscription option).
“Initially, the response was very low. However, it picked up with a collection of Rs 300 crore alone in the last week of closure,” one of the issue managers said on condition of anonymity.
“The company may come out with the second tranche in January. People invest in infra bonds mainly for tax (saving) reasons. Hence, the response would be better next time as we will be closer to the fiscal year end,” the person said.
Following is IDFC’s e-mail response to moneycontrol.com’s queries on the bond issue:
“We are in the process of collating the numbers, which should take a day more, and you would appreciate that we do not wish to hazard a guess on financial number. We will do a formal media release tomorrow, and will have it sent to you.”
Meanwhile, the response to L&T Infrastructure Finance Company’s infrastructure bonds (9% coupon rate) is improving. So far, the company has collected around Rs 175 crore as compared with Rs 40 crore raised in the first 8-10 days of the subscription period. The company aims to raise Rs 1,100 crore in FY12. L&T’s bond issue closes on December 24.
The issue is offering the same 9% and will close on December 24.
An investment upto Rs 20,000 is eligible for individual tax deductions under section 80CCF of Income Tax act. This is above the normal tax exemption limit of Rs 1 lakh. However, the interest income is fully taxable.
IDFC stock price
On July 31, 2015, IDFC closed at Rs 149.95, down Rs 2.85, or 1.87 percent. The 52-week high of the share was Rs 187.50 and the 52-week low was Rs 134.20.
The company's trailing 12-month (TTM) EPS was at Rs 9.27 per share as per the quarter ended June 2015. The stock's price-to-earnings (P/E) ratio was 16.18. The latest book value of the company is Rs 106.22 per share. At current value, the price-to-book value of the company is 1.41.
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