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Sunday, September 01, 2013

Invest in REC Tax Free Bonds for short term 20% upside!!

REC (Rural Electrification Corporation) has come out with TAX Free Bonds with following coupon rates for individual investors (Category IV - upto 10 lakhs)

10 yrs bond: Coupon Rate: 8.26% (Tax Free)
15 yrs bond: Coupon Rate: 8.71% (Tax Free)
20 yrs bond: Coupon Rate: 8.62% (Tax Free)

Assuming an individual investor in tax bracket of 33%

8.26% Tax Free = 12.32% (With Tax @ 33%)
8.71% Tax Free = 13% (With Tax @ 33%)
8.62% Tax Free = 12.86% (With Tax @ 33%)
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REC bonds are virtually Risk free hence comparing with Bank FD's..
Bank FD rates are close to 9% and Senior citizen rates are close to 9.5% 

keeping a buffer lets assume that bank FD give us 10% return (Before Tax)

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Rs 1000 invested in 8.26% REC Tax Free Bonds is equal to 12.32% taxable bonds.

So Rs1000 invested in REC Bonds will give 123.20 in interest income (before Tax)
Rs1000 invested in BankFD with 10% interest rates will give 100 as interest income..

So the question is how much capital do we need to invest in bank FD to get 123.20?
The answer is 1232/= rupees  invested in 10% bank FD gives you 123.20 in interest income.
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REC bonds of Rs 1000/=  face value are going to be listed in BSE 
and "Most Likely" will quote at 1232/= 
=====================
8.26% Tax Free = 12.32% (with Tax); Quote at: 1232/= (23.20% gain)
8.71% Tax Free = 13% (With Tax); Quote at: 1300/= (30.00% gain)
8.62% Tax Free = 12.86% (With Tax); Quote at 1286/= (28.60% gain)
=====================

So there is a good chance to make a short term 20% profit by subscribing to these REC bonds and selling on listing.. that's a 1 month 20% return.. almost guaranteed..

PN: These are based on an assumption that we are equating REC bonds to 10% FD by banks.. there are finance companies bonds which payout 11% and even 12% (but at lower credit rating)  we have kept a buffer of 0.50% as real bank FD are around 9.5% (Senior citizen)

Personally I think this is a risk free 20% but please do your own deep dive before investing!! I did speak to ICICI Direct folks and they said already around 160Cr is sold on 30th August (1st day) 
This is first come first served basis.. 
This is a 1000Cr issue with over subsription level of 2500Cr 40% reserved for individual investors.!!
Private placement of bonds has already been oversubscribed

Links:

Personally I would recommend all investors to invest and then .. short term players can sell on listing (my plan also) there is value also in holding for long term.. only other tax free plan which comes close is PPF and the rates change every year depending on change in GOI Bond rates.(interest rate on PPF is falling..) . and there is a max limit of just 1 lakh 

PN: this is based on publicly available information and my personal opinion.. please do your own deep dive before investing



5 comments:

Dharel Ajay said...

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Established a decade ago, World Sight Journey has been specializing in providing premier trekking, expeditions, and touring packages in the various hotspot destinations of Nepal. Besides, we also have been organizing hiking, jungle safari, river rafting, bungee jumping and mountain biking packages successfully throughout the popular destinations of Nepal. Since the inception, World Sight Journey has been proudly showcasing the scenic beauty of glorious Himalayas, the grandeur of incredibly diverse and wonderful Nepalese culture, amazingly rich flora and fauna, some yet-to-be discovered landscapes and many more to its valued clients from around the globe. We are so proud to showcase Nepal to the world.
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-----------------------
WORLD SIGHT JOURNEY
P. O. Box :- 8765 Thamel, Kathmandu,
Nepal Mobile No:- +977-9851173315, 9849494604
Office Land Line : +977-1-4265838
Email:- info@worldsightjourney.com
Email :- ajay_darel@hotmail.com
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URL :- www.worldsightjourney.com

Sappa Tamang said...

Dear valuable guest,
You are grand Welcome to Nepal Base Camp Treks. A Premier Himalayan Local Trekking and tour Agency in Kathmandu
Our teams cordially feel immense pleasure to welcoming you all the official page of Nepal Base Camp Treks (P) Ltd, a premier local travel and trekking operator based in Kathmandu. After long experience in Tourism Sector and being a government registered trekking company, Nepal Base Camp Treks takes pride for being recognized by national and international organizations, currently affiliated TAAN (Trekking Agencies Association of Nepal), NTB (Nepal Tourism Board), NMA (Nepal Mountaineering Association), PPN (porters progress Nepal ), FNTN (Federation of National Tourism Nepal ), Kathmandu Environmental Education Project (KEEP) and IETS (International Eco-Tourism Society ),. Moreover, our company is featured in and highly recommended by much-acclaimed Trip Advisor as well.
Based in Kathmandu, we have been successfully operating a number of reliable travel options for various trips to all Nepal Himalayas as, Everest Base Camp Trek, Everest Chola Pass Trek Gokyo lake Valley Trek, Annapurna Base Camp Trek, Ghorepani Poonhill Trek, Annapurna Circuit Trek, Langtang Valley Trek, Helambu Circuit Trek, Manaslu Circuit Trek, Upper Mustang Trek, and neighboring countries Tibet and Bhutan. Since the inception, we have been largely providing our valuable clients with opportunities for Sightseeing Tours, City tours, Mix Cultural Trekking Tours, Cultural Tours, Pilgrimage Tours, Tea House Trekking, Camping Trek in High Himalayas and Mountaineering, and all other sort of outdoor adventure trips inside of Nepal Himalaya. Decade 16 year’s long experienced in Tourism industry has taught us a lot to excel up to be one of the your most trusted trekking and travel operators of Kathmandu Nepal. The primary reasons behind this trust and success are the way we serve our clients and the way we've been organizing every sort of trips. The safety, security, and satisfaction of our clients have always been of paramount importance to us, and we're never saying in words only we do in practical way. Our teams keep receiving huge appreciation from our valued clients from all around the world, which we think, is our guiding light to make best out of your future trips.
Humbly if you are planning your next holiday in Nepal Himalaya, let us know, we would like to help your plan and organize your life-defining trip under your feet and memorable being a government registered trekking company, Nepal Base Camp Treks takes pride for trekking in nepal, and goverment resgister trekking company in nepal being recognized.
Nepal Base Camp Treks (Pvt. Ltd.)
Post Box: 8170 Thamel, Kathmandu, Nepal
Mobile: +977-9851111874
Email: sappagomso@hotmail.com
info@nepalbasecamptreks.com
URL:- www.nepalbasecamptreks.com

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Sappa Lama Gomso said...

Everest Base Camp Trek is one of those journeys that create your vacation dreams return true. Hiking on the legendary foothills just under the mighty Mount Everest 8848m with exciting views of the master peaks will solely be found within the Everest Region. This celebrated trek is thought worldwide for its trailblazing routes & the landscapes speak to your senses. On this trip you furthermore Mera peak out at the celebrated Kala Patthar (5,600m/18,373ft) read purpose for a few grand direct views of the very best mountain in the world. Everest Base CampTrek additionally includes different celebrated eight thousand peaks like Mt mountain peak (8,516m /27,940ft), Makalu (8,485m /27,838 ft) Cho-Oyu (8,201m /26,906ft). The culture of this specific space is of nice notebook stuff & interacting with the native of us puts a lot of zest into your venturesome journey as you walk through the Khumbu region of the Asian country. This legendary path could be a psychological thriller for top & wild hikers World Health Organization want the tread the methods wherever legends walked before on their thanks to conquering mountain peak, some did some didn’t however the Everest Base Camp Trek path keeps those legends alive for many trekkers World Health Organization head to the present region. The trip begins with a stirring mountain flight to Lukla, one among the world’s highest mountains; & as shortly as you set down at that altitude, the remainder is history. Your hike takes you to the favored village city of Namche, referred to as the ‘gateway to the Khumbu’’ & from there on you rehearse quiet monasteries with the acknowledge Sherpa of us World Health Organization inhabit this region & their culture is price noting. On the way, we have a tendency to visit the Sagarmatha parkland, home to some rare fauna & flora, this additionally wherever we have a tendency to adapt for a few time. We head deep into the Khumbu hiking into the forest of shrub, birch trees & pine, with colorful villages wherever we have a tendency to square measure sincerely welcome by the Sherpa community. we have a tendency to square measure pleasantly stunned to return across a hospital-based mostly in Khunde and health post at Pheriche that shows this region not solely cares for the locals however also are able to look out of trekkers World Health Organization have altitude issues. Doctors square measure invariably at the post for aid treatment. The Everest Base Camp Trek is arduous however varied teahouses square measure found on the paths providing smart grubbed to shelter from the generally harsh climate. Our trek culminates at base camp so we have a tendency to create a path for Namche as we have a tendency to hike back to Lukla to rendezvous for our flight to Katmandu. we have a tendency to add an additional contingency day for inclement weather which will delay flights. It’s recommended to be pretty acceptable to undertake this journey; you only want some smart hiking exercise before doing this trip. And Nepal Base Camp Treks can do the remainder to allow you AN action-packed odyssey of a period.

Sappa Lama Gomso said...

Annapurna Base Camp Trek is one in every one of the big ranges that expand from Vara-Shikar (Annapurna Fang) towards Manaslu and Lamjung range that is roughly 60-70 kilometer of lateral distance. which has one peak over eight,000 meters, 13 peaks over seven,000 meters, and sixteen additional over half dozen,000 meters. The landscape of the region provides breathtaking sceneries. the first morning views of the mountains square measure majestic. The sunrise views from on the trail of the trek square measure breathtaking. The treks mix such a large amount of totally different landscapes and convey you, therefore, getting ready to the bottom of seven,000 and 8,000-meter peaks.Annapurna Base Camp trekking designed by Nepal Base Camp Treks is one in every of the foremost loved trekking destinations. throughout the trek except witnessing made cultural diversity, you'll additionally withstand remote farms still as villages occupied by Gurung ethnic tribes WHO square measure popularly celebrated everywhere the planet for his or her bravery. you'll be able to expertise the culture, previous traditions, and spiritual values of grunge individuals. To begin ten days Annapurna Base Camp, we are going to drive to Nayapul from Pokhara and walk right along the trail and keep on trekking downhill following a watercourse to Birethanti. Also, we are going to climb to Jhinu danda wherever we will get pleasure from tumbling within the natural spring. On the thanks to Dovan, we are going to be rewarded by the outstanding views of Mt. Machhapuchhre, Annapurna South, and Huinchuli. Plus, we are going to pass Chomrong, an oversized Gurung village. we are going to additionally pass the tree-plant full of bamboo and bush trees beside the Modi watercourse and reach Donovan. Then we are going to walk for six hours to urge to Annapurna Base Camp lies at the elevation of four,095m via Machhapuchhre base camp that fantastically assaults the northern aspect of the very giant Mt. Machhapuchhre. Walking for around four hours we are going to reach Annapurna Base Camp that enthralls the North American nation with the putting views of the world’s tenth highest Annapurna I ( eight,091 m), Mt. Machhapuchhre Annapurna South, Huinchuli and additional. Trekking Guide Team offers a wonderful probability to travel for Annapurna Base Camp that is one in every of the foremost picturesque and exciting set within the heart of the nice Mt. Annapurna. we are going to cause you to feel the nice distinction if you choose to travel with North American nation since our good staffs and hospitable porters will certainly cause you to trek safe, comfy and unforgettable.