Higher interest rates and the weak economic environment have led to a steep 29 percent fall in fund mobilisation through corporate bonds on private placements during the first nine months of the outgoing fiscal, says a study. During the April-December period, banks, financial institutions, and corporates together raised Rs 1,81,808 crore through debt private placements as against Rs 2,56,327 crore mobilised last year," Pranav Haldea, managing director of Prime Database, which released the study, said today.
"There was reluctance from institutions and corporates to raise debt funds due to higher interest rate scenario and also as overall economic condition remained weak. Probably, we can see an increase in issuance post election," Haldea said. The study said Rs 1,81,808 crore was mobilised by 188 institutions and corporates, from the deals which had a tenor and put/call option of above 365 days. The biggest mobilisation in the period was made by the financial institutions and banks at Rs 98,145 crore in comparison to Rs 1,35,379 crore in the year-ago period, a decrease of 27 percent, the study said.
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Private sector issuance of coporate bond via private placements witnessed a decrease of 25 percent at Rs 66,632 crore as against Rs 88,336 crore in the previous year. Mobilisation by state financial institutions also decline by 73 percent at Rs 1,251 crore compared to Rs 4,569 crore. PSUs' mobilisation also declined 43 percent at Rs 13,069 crore in the period compared to Rs 23,052 crore last year. State-level undertakings also saw a major fall of 46 percent at Rs 2,711 crore in mobilisation of funds through issuance of corporate bonds on private placement basis, the study said.
Government organisations and financial institutions put together mobilised 50 per cent of the total amount, same as corresponding period of the previous year. As per the data, among government organisations, financial institutions, banks led with an 82 percent share, followed by 14 per cent share by PSUs, 3 percent by SLUs and 1 percent by SFIs.
The highest mobilisation through debt private placements was by Power Finance Corporation at Rs 18,648 crore, followed by HDFC at Rs 16,675 crore, LIC Housing at Rs 14,170 crore and Rural Electrification Corporation at Rs 14,113 crore. In the previous fiscal, total fund mobilisation through private placements stood at Rs 3,52,169 crore and this year it could dip to Rs 2.2 lakh crore, Haldia said.
Power Finance stock price
On March 10, 2014, Power Finance Corporation closed at Rs 173.30, down Rs 0.05, or 0.03 percent. The 52-week high of the share was Rs 209.50 and the 52-week low was Rs 97.40.
The company's trailing 12-month (TTM) EPS was at Rs 40.15 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 4.32. The latest book value of the company is Rs 182.22 per share. At current value, the price-to-book value of the company is 0.95.
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