Muthoot Fincorp NCD – Not Worth

Published on Wednesday, July 2, 2014 by Dilip Davda | Modified on Sunday, September 27, 2015

Kerala-based Muthoot Fincorp, the flagship company of the Muthoot Pappachan Group, is a diversified company engaged in financial services that includes gold loans, housing finance etc, hospitality business, Automotive, Infra, Realty, and IT etc. is entering the primary market with its maiden debt offer. The base size of the offer is Rs. 100 crore with a green shoe option to retain 100% oversubscription; the total issue size is Rs. 200 crore.

The company is issuing Secured NCD of Rs. 1000 each having interest rates of 11.25% to 12% depending on the monthly, annual and cumulative options as per choice of investors and hopes to mobilize Rs. 200 crore. Funds so mobilized will be used to increase its loan portfolio. The issue opens for subscription on 03.07.14 and will close on or before 04.08.14. Minimum application is to be made for 10 NCDs and in multiple of 1 thereon, thereafter. Allotment of the same is available in demat as well as physical mode, however, trading will take place only in demat mode. For cumulative scheme too these NCDs are not available in physical mode. Post allotment, these NCDs will be listed on BSE.

These NCDs have been rated by CRISIL as “CRISIL A/Negative” indicating adequate degree of safety regarding timely servicing of financial obligations, however, such instruments carries low credit risk. This issue is lead managed by SMC Capitals Ltd and Integrated Enterprises (India) Ltd is the registrar to the issue. SBICAP Trustee Company Ltd is the Bond Trustee.

Although, the company offers lucrative coupon rate, lower grading makes it a risky bet.

Remark: Not Worth