The Hindu Business Line : Madras Cements: Invest

Madras Cements: An investment may be contemplated in the fixed deposit programme of Madras Cements; the one- and three-year options may be considered. It may be better to opt for the three-year option than the two-year fixed deposit, as incremental returns are attractive.

We had earlier this year recommended only the one-year option. As the changes in tax laws have reduced the attractiveness of deposits in banks, the fixed deposit options of high-quality companies that have offered low rates have become more attractive.

The one-year option can be used to park funds that might be idle in a bank account. The three-year option can be considered as a core part of your portfolio of fixed-income investments.

Madras Cements offers an annual interest rate of 7 per cent. If one opts for the cumulative option, the yields are likely to be a tad higher.

As interest rates appear to have bottomed out, one could consider investing between 25 per cent and 40 per cent of the surplus now and park the rest in floating-rate funds.

The rest of the money could be invested in FDs over the next year so that one can benefit from the modest hike in interest rates that appears likely. Madras Cements rests on fundamentals that should ensure a high degree of safety for interest and principal payments.

The fixed deposit programme of Madras Cements is one of the superior options available to investors.

Srei Infrastructure Finance: Investments in the one-year fixed deposit programme of Srei can be considered. The company offers 7.25 per cent for a one-year cumulative term deposit.

The interest rate is attractive considering housing finance companies and banks offer rates that are lower by more than one percentage point. In addition, from this financial year, interest from bank deposits and housing finance companies do not enjoy the protection under Section 80-L.

Srei is a fast growing non-banking finance company specialising in infrastructure project financing which has attracted equity investments from international institutions such as IFC of Washington and FMO of Netherlands. The company boasts of strong capital adequacy and has also low incidence of bad loans. The fixed deposit programme is ideal for investors with a one-year investment horizon.

Jindal Steel and Power: Investments in the fixed deposit scheme of Jindal Steel and Power can be considered with a one-year perspective. The interest rates offered are 7 per cent for one year, 7.25 per cent for two years and 7.5 per cent for three years.

The company offers cumulative and non-cumulative schemes. The cumulative scheme is compounded at quarterly rests. The minimum deposit is Rs 10,000 in the case of cumulative scheme while it is Rs 25,000 for non-cumulative scheme.

Revenue growth has been robust at about 40 per cent. The company has been able to increase its margins mainly on account of lower cost of raw materials.

A rich product mix with increasing focus on value-added alloy steel, addition of sponge iron and captive power capacity, high demand from construction and infrastructure sectors and the prices of sponge iron which are expected to rule at higher levels would augur well for the company's earnings growth.

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