Retail investors looking for alternatives to the stock market or traditional fixed deposits can consider investing in Non-Convertible Debentures (NCDs) from three finance companies: Muthoot Fincorp, Indostar Capital Finance, and Sammaan Capital. These NCDs offer returns between 9% and 10.75% over periods ranging from 2 to 10 years.
“Investors who want to take some profits from equities and shift to safer options can allocate money to these NCDs,” says Anup Bhaiya, Managing Director of Money Honey Financial Services.
The minimum investment required is ₹10,000, and a demat account is needed to purchase these NCDs. The interest rates vary based on the investment period and payout options.
Muthoot Fincorp, rated AA, offers 9-10.10% returns, Sammaan Capital offers 9.65-10.75%, and Indostar Capital Finance, rated AA-, offers 10.5-10.7%.
The terms range from 2 to 10 years, with monthly, quarterly, annual, or cumulative payouts. These companies offer higher returns compared to bank deposits, which have lower interest rates due to their higher AAA ratings.
For example, a 35-month HDFC Bank deposit offers 7.35%, while Muthoot Finance pays 9.65% for a similar term. Indostar pays 10.7%, and Sammaan Capital pays 9.9%.
“These NCDs provide 230-335 basis points higher returns than bank deposits, and since they’re listed on the stock exchange, there’s some liquidity,” says Vikram Dalal, Managing Director of Synergee Capital.
Dalal recommends Muthoot Fincorp as the top choice, followed by Indostar Capital and Sammaan Capital. However, investors are advised to diversify their investments across multiple issuers to reduce risk.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
