High Yield | A+/ Stable

 

In the ever-evolving fixed-income landscape, Share India Securities Ltd. has announced a compelling opportunity for investors: a private placement of Secured Non-Convertible Debentures (NCDs) offering a 10.70% annual return paid monthly. Backed by strong financials and a CRISIL A+/Stable rating, this offering is tailored for investors seeking high-yield, short-duration instruments with moderate risk.

About Share India Securities Ltd.

Founded in 1994, Share India Securities Ltd. is a diversified financial services provider engaged in:

• Equity, commodity & currency trading
• Mutual fund & insurance distribution
• Lending, NBFC operations, and algo trading

The firm operates with a technology-first approach and holds a market share of 2.5–3% in Indian trading volumes, with a daily turnover exceeding ₹9,000 Cr. It is listed on both BSE and NSE, and has a market capitalization of around ₹4,000 Cr (as of June 2025).

Key Strengths

• 150+ years of collective promoter experience
• Presence in 280+ locations across 16 states
• Robust internal systems and regulated by SEBI, BSE, NSE, MCX, and CDSL/NSDL

Financial Overview

Snapshot stating the Revenue, EBITDA, Net Worth, Cash & Cash Equivalents and PAT (In crores)

Issue analysis

Pros

• Attractive Yield – 10.70% p.a. monthly payouts, higher than many fixed-income alternatives.
• Short Tenure – 24-month maturity, suitable for medium-term investors.
• Strong Credit Profile – CRISIL A+/Stable rating indicates moderate safety.
• Secured Instrument – Backed by collateral (current assets) + personal guarantees from promoters.
• Quarterly Principal Repayment – Reduces reinvestment risk vs. bullet repayment.
• Healthy Financials – Low gearing (0.21x), strong liquidity (₹2,460 Cr unencumbered cash).

Cons

• Market-Linked Risk – Earnings depend on trading volumes; downturn may impact profitability.
• Limited Liquidity – Private placement, so no active secondary market.
• Interest Rate Risk – If rates rise, the fixed 10.70% may underperform new issuances.
• Regulatory Exposure – SEBI/RBI policy changes could affect business.

How Does It Compare?

Liquidity note: Being a private placement, exit may be slower unless listed or transferred.

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Strengths

1. Strong Financial Performance

• Revenue Growth: CAGR of 69% over the last four years (FY22–FY25)
• Profitability: PAT of INR 328 Crores (FY25) with an ROA of 8.68%
• Liquidity Position: Unencumbered cash reserves of INR 2,460 Crores (as of March 2025)
• Low Leverage: Gearing ratio of 0.21x, reflecting a conservative debt policy

2. Experienced Leadership & Strong Governance

• Promoters and management bring deep expertise in trading, risk management, and regulatory compliance.
• Well-diversified business model across broking, NBFC, insurance distribution, and algo trading.

3. Robust Credit Profile & Banking Relationships

• Rated A+/Stable by CRISIL, indicating a low credit risk.
• Strong relationships with leading banks (HDFC, ICICI, Axis, etc.) and financial institutions.

4. Secured & Structured Repayment Mechanism

• The NCDs are backed by collateral (current assets & receivables) and personal guarantees from promoters.
• Quarterly principal repayments reduce reinvestment risk compared to bullet repayments.

Weakness

1. Market-Linked Business Risks

• Revenue depends on capital market activity—economic downturns or trading slumps could impact profitability.

2. Regulatory & Compliance Risks

• As a financial services firm, it is exposed to SEBI, RBI, and other regulatory changes.

3. Interest Rate Sensitivity

• If interest rates rise, the fixed 10.70% coupon may become less attractive compared to new issuances.

4. Liquidity Constraints (for NCD Holders)

• Since this is a private placement, secondary market liquidity may be limited.

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Source- Prospectus June 13, 2025

Disclaimer- The information is published as on date 6/30/2025 based on information available on Prospectus June 13, 2025. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors