In the dynamic landscape of financial instruments, Non-Convertible Debentures (NCDs) have emerged as a popular investment option for individuals seeking stable returns with relatively lower risk compared to equities. In recent years, a rise in Digital Investment Platforms in India and access to expert Wealth Management Services have made NCDs even more accessible to retail investors. If you’re considering NCDs, understanding how they work and which companies offer the most promising returns is crucial.
This guide will walk you through the process of how to invest in NCDs, the benefits and risks involved, and provide insights into three prominent NCDs available in 2025:
- Muthoot Fincorp Limited NCD
- Edelweiss Financial Services Limited NCD
- Adani Enterprises Limited NCD
- What is an NCD?
- Why Should You Invest in NCDs?
- How to Invest in NCDs in India
- Best NCDs to Invest in 2025
- Factors to Consider Before Investing in NCDs
- Benefits of Investing Through Digital Platforms
- Conclusion
- FAQ
What is an NCD?
A Non-Convertible Debenture (NCD) is a fixed-income financial instrument issued by companies to raise capital. Unlike convertible debentures, NCDs cannot be converted into equity shares of the issuing company. Instead, they provide regular interest income and return the principal amount at maturity.
NCDs are usually rated by credit rating agencies like CRISIL, ICRA, or CARE to indicate the risk associated with investing in them.
Why Should You Invest in NCDs?
Here are the key reasons why investors prefer NCDs:
- Fixed Interest Returns: Predictable income in the form of interest, which is often higher than traditional fixed deposits.
- Diversification: Adds a fixed-income asset to your investment portfolio, reducing overall risk.
- Flexible Tenure Options: Tenures typically range from 1 year to 10 years.
- Listed on Stock Exchanges: Most NCDs are listed, offering liquidity if you need to exit before maturity.
How to Invest in NCDs in India
Investing in NCDs in India has become easier due to the rise of Digital Investment Platforms. Here’s how you can invest:
Step 1: Choose a Trusted Platform
Select a Digital Investment Platform in India that allows NCD investments. Examples include Zerodha, Groww, Upstox, or your registered wealth advisor.
Step 2: Complete KYC
Ensure your KYC details (Aadhaar, PAN, bank account) are verified and linked to your Demat account.
Step 3: Analyze the NCD Offer Document
Before investing, read the offer document or prospectus, which includes details about interest rates, maturity, issuer profile, and credit ratings.
Step 4: Place the Order Online
Place your NCD application through your broker or platform. Once allotted, the NCDs will be credited to your Demat account.
Best NCDs to Invest in 2025
Here are three high-quality NCDs that are currently open or expected to be available in 2025:
1. Muthoot Fincorp Limited NCD – 2025 Edition
Overview:
Muthoot Fincorp is one of India’s leading non-banking financial companies (NBFCs), primarily involved in gold loans, housing finance, and SME lending.
NCD Details:
- Issue Size: ₹500 Crore (with a green-shoe option of ₹500 Crore)
- Tenure: 24 months to 84 months
- Interest Rate: Up to 10.25% p.a.
- Type: Secured, Redeemable NCDs
- Credit Rating: CRISIL A/Stable
Why Invest?
- Backed by a strong parent brand
- Attractive interest rate
- Secured nature reduces default risk
Risk Factor:
- NBFC sector exposure
- Sensitive to gold market volatility
2. Edelweiss Financial Services Limited NCD – 2025 Tranche
Overview:
Edelweiss is a diversified financial services company offering credit, asset management, and insurance services. It has built a credible track record in issuing NCDs over the years.
NCD Details:
- Issue Size: ₹200 Crore (plus green-shoe option up to ₹200 Crore)
- Tenure: 36 months, 60 months, and 120 months
- Interest Rate: Up to 10.20% p.a.
- Type: Unsecured, Subordinated Tier II NCDs
- Credit Rating: CRISIL A+/Negative
Why Invest?
- Long-term investment horizon
- Competitive returns compared to FDs
- Ideal for investors seeking periodic income
Risk Factor:
- Being unsecured, these NCDs carry higher risk
- Interest rate is subject to market volatility
3. Adani Enterprises Limited NCD – Expected 2025 Series
Overview:
Part of the Adani Group, Adani Enterprises is engaged in infrastructure development, energy, logistics, and mining. The group’s strategic expansion has made it a significant player in India’s economy.
NCD Details (Expected):
- Issue Size: ₹1,000 Crore
- Tenure: 3 years to 10 years
- Interest Rate: 9.50% – 10.00% p.a.
- Type: Secured NCDs
- Credit Rating: CARE AA- / Stable
Why Invest?
- Backed by a large conglomerate
- Moderate to high returns
- Suitable for medium-to-long-term investors
Risk Factor:
- Exposure to sectoral and regulatory risks
- Global sentiment towards Adani group companies
Factors to Consider Before Investing in NCDs
1. Credit Rating
Always invest in NCDs rated ‘A’ or above by credit agencies. Higher ratings indicate lower default risk.
2. Issuer Profile
Research the issuing company’s financial health and past repayment history.
3. Secured vs Unsecured
Secured NCDs are backed by assets; unsecured NCDs carry higher risk but may offer better interest.
4. Taxation
Interest from NCDs is taxable as per your income tax slab. Gains from selling before maturity are subject to capital gains tax.
5. Liquidity
Listed NCDs can be traded on stock exchanges, offering liquidity. But price fluctuations are common.
Benefits of Investing Through Digital Platforms
Using a Digital Investment Platform in India simplifies the process:
- Paperless transactions
- Real-time portfolio tracking
- Ease of comparison between issuers
- Auto reminders for maturity dates and interest payout
Such platforms are often integrated with Wealth Management Services, offering professional advice and risk profiling.
Conclusion
NCDs offer a great way to generate consistent income while preserving capital, especially when hand-picked based on sound financial metrics and issuer credibility. As we’ve seen, companies like Muthoot Fincorp Limited, Edelweiss Financial Services Limited, and Adani Enterprises Limited provide compelling options for 2025 investors. However, it’s vital to match your investment horizon, risk appetite, and income needs with the right NCD.
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FAQ
Q1. Is there a minimum amount required to invest in NCDs?
Yes, typically the minimum application amount is ₹10,000 and in multiples thereafter. Always check the specific NCD offer document for exact requirements.
Q2. Can I exit NCDs before maturity?
If the NCD is listed on stock exchanges, you can sell it before maturity. However, prices may fluctuate due to market demand, interest rate movements, and issuer perception.
