Financial Daily from THE HINDU group of publications
Sunday, Apr 10, 2005
Financial Daily from THE HINDU group of publications Sunday, Apr 10, 2005 |
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Investment World
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Fixed Deposits FD options
The interest rate is attractive, considering housing finance companies and banks offer rates that are lower by more than one percentage point. In addition, from this financial year, interest from bank deposits and housing finance companies do not enjoy the protection under Section 80-L. Srei is a fast growing non-banking finance company specialising in infrastructure project financing which has attracted equity investments from international institutions such as IFC of Washington and FMO of the Netherlands. The company boasts of strong capital adequacy and has also low incidence of bad loans. The fixed deposit programme is appropriate for investors with a one-year investment horizon. Television Eighteen: An investment may be considered in the fixed deposit programme of Television Eighteen. The company offers an FD for one year. The interest rate of 9 per cent on offer appears attractive, as does the 9.5 per cent for senior citizens. This rate is one of the higher ones on offer and appears to compensate for the higher risks involved with the company's operations. But investors should invest only apart of the funds set apart for investment in fixed-income options, perhaps not more than 20 per cent. The revenue and earnings profile of the company has shown a steady improvement over the past year; earnings are now at healthy levels that provide for a high degree of comfort in paying interest obligations. The company operates two channels in the business news space — CNBC TV 18 in English and the recently-launched Awaaz in Hindi. It now faces intense competition from New Delhi Television. But over a one-year period, we do not perceive any significant risk to profitability and its ability to pay interest on its fixed deposits. Buy into this attractively priced FD option. India Glycols: An investment can be considered in the two-year fixed deposit of India Glycols. It also offers a three-year option, which can be avoided for now, as the incremental returns do not appear attractive if cyclical risks are considered. The company offers an interest of 8 and 8.5 per cent on its deposits for two and three years respectively. Cumulative options are also available. India Glycols, backed by a rise in prices of mono-ethylene glycol (MEG), has reported a sharp rise in profits for the three quarters in the fiscal 2005. Prices of molasses have also been rising at a slower pace contributing to higher margins. India Glycols is the only manufacturer of MEG using the molasses route; it also makes di-ethylene glycol and ethylene oxide derivatives. The prices of molasses are expected to rise even further, while global MEG prices are expected to decline cutting into the margins of India Glycols. Interest expenses are, however, sufficiently covered and the company would be able to meet their interest obligations.
BL Research Bureau
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