FD Watch. Apollo Hospitals FD: Healthy interest

The highest interest rates offered by bank fixed deposits are now at 8.8 to 8.9 per cent for one and five years. A year ago, these rates were at 9.25 to 9.5 per cent. With slow credit growth and the Reserve Bank of India steadily cutting benchmark rates since January this year, deposit rates are firmly bound south.

For those willing to step outside the safety of bank deposits and diversify their FD portfolio, corporate fixed deposits with good credit ratings are an option. Among these is the fixed deposit offer from Apollo Hospitals and Enterprises.

The FD has a FAA+ rating from rating agency CRISIL. Though one notch below the highest grade, the rating still indicates a high degree of safety on timely servicing of your deposit. For periods of one, three, and five years, the interest rates are 9, 9.25 and 9.5 per cent, respectively.

Across time periods, the rates compare favourably with corporate and NBFC deposits with similar credit ratings. Of the higher-rated deposits, only Dewan Housing Finance offers the same interest.

The three-year cumulative option looks attractive given that interest rates are headed downwards for the short term, and it’s best to make the most of the higher rates. Investing in deposits for shorter time periods throws up the risk of having to reinvest the amount at lower interest rates. Interest in the cumulative option will be compounded monthly. In the non-cumulative option, interest will be paid out only on a quarterly basis. The minimum investment amount is ₹25,000 and in multiples of ₹1,000 after that.

There are two features to the Apollo Hospitals deposit, though they may not actually be used by you. One, to the extent of deposit, the first deposit holder will be covered under the group’s personal accident insurance.

Two, on hospitalisation in specified Apollo Hospital branches, you can get a discount of up to 10 per cent of the deposit amount.

As of December 2014, Apollo Hospitals and Enterprises had a network of 9,091 hospitals, both owned and managed. These services formed over 60 per cent of consolidated revenues. The company also has a pharmacy chain of 1,784 outlets across the country, accounting for around a third of its total revenues. For the past four years, consolidated revenues have grown at an annual 21 per cent on the back of both steady rise in patient numbers as well as upward revision in realisations per bed.

Operating profit margins have held in the range of 14-15 per cent. Interest cover improved slightly to 6.7 times in 2014-15 against 5.8 times the year before.

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