In recent times FDs, have come to the limelight as the rates offered have improved from 2022 onwards compared to previous periods. Hawkins Cookers has come out with 13, 24 and 36-month FDs. Despite the spike in rates, the company has offered FD the same interest rates for the past two years. Given the changed rate scenario and the small premium for the higher tenures over better-rated deposits from non-banking financial companies, should you consider this offer? Here’s what you must know before taking your investment call.

What is on offer?

The company is offering FDs for a tenure of 13, 24 and 36 months, and the rates being offered for these tenures are 7.5 per cent, 7.75 per cent and 8 per cent respectively. The minimum deposit amount is ₹25,000, and in multiples of ₹1,000 thereafter, the maximum amount that can be deposited or renewed by a single depositor is ₹20 lakh rupees. The company is rated AA- by ICRA.

The company’s revenue for FY23 grew 5 per cent YoY to ₹1009 crore, whereas the EBITDA of the company grew 11 per cent for FY23 to ₹140 crore. The EBITDA Margin of the company in FY23 grew marginally to 14 per cent against 13 per cent in FY22. The company’s net profit for FY23 grew 13 per cent to ₹95 crore, and the Net profit margin for FY23 also grew marginally to 9.4 per cent against 8.7 per cent in FY22. The company is a net cash company of ₹56 crore and a debt-to equity ratio of 0.15 times.

How does it fare against other alternatives?

Although the rates on FDs have run up in the last 1-1.5 years, the rates offered by Hawkins Cookers are not very attractive. The current rates are the same as in the last two years. AAA-rated NBFCs like Bajaj Finance and Mahindra Finance offer rates in the range of 7.4 per cent to 8.05 per cent for 1-3 years. There may need to be 10-25 basis points premium of Hawkins FD over these NBFCs to justify investing in the lower-rated firm.

In addition to these, another avenue where depositors can look out for opportunities is the Small Finance Bank (SFB) space. AU SFB is offering 7.75 per cent for 1-2 years tenure and 8 per cent for 2-3 years tenure, Equitas SFB is offering 8.5 per cent for 1–2-year tenure and 8.25 per cent for 2–3 year tenure, and Suryoday SFB is offering 8.5 per cent for 1-2 year tenure and 8.6 per cent for 2-3 year tenure.

SFBs, being Banks, have the DICGC cover of ₹5 lakhs and are therefore considered safer than NBFCs or company FDs.

What should depositors do?

Hawkins Cooker’s rates are low when compared to the options discussed above; therefore depositors may let this pass and look out for other opportunities in the spaces discussed above.