Wednesday, September 5, 2012

Special Situation : Tax Free Returns of 15 % ?

There is a special situation of Preference Shares of JSW Ispat Industries. Its preference shares are listed on BSE (700109) and NSE (Jswispat , P1).

The Interest of Preference shares is 0.01% per annum, The face value of shares is Rs 10/- redeemable at par for 15th Jun 2018 is 8 Quarterly installment.,17/04/2006,20/04/2006,,Equity,All,All,Scrip%20Name%20/%20Code,,

If you buy these preference shares, at CMP of Rs 3.95/- your yield is 15.03 % , which is Tax free because, when these shares are to be redeemed, you can very well sell in market by paying STT and claim Capital Gains which is Tax Free.

These Shares are listed since 2006, but with the merger of JSW Ispat with JSW Steel has changed the Risk profile of these preference shares and suddenly they have become investment grade.

This is not the recommendation to anybody whatsoever to buy or sell this share, but it is my thought process and views on this topic.

I welcome your critical comments and suggestions.

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