Chemmanur Credits July 24, NCD Issue review (Avoid)

• This is the 4th Debt issue from CCIL since December 2022.
• The last debt offer was in February 2024.
• The company marked improved performance for FY24.
• IND BBB-/Stable rating is considered to be an average grade indicating moderate risks.
• There is no harm in skipping this debt issue despite lucrative coupon rates.

ABOUT COMPANY:
Chemmanur Credits and Investments Ltd. (CCIL) is a non-deposit taking, non-banking financial company (base layer) registered with the RBI, primarily engaged in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the state of Kerala, Tamil Nadu, Karnataka Andhra Pradesh and Maharashtra. It also provides Microfinance Loans, business and personal loans, money transfer services and distribution of third party insurance products.

CCIL is a part of Boby Chemmanur Group which is engaged in diverse range of businesses and based in Kerala, India. The group has retail gold jewellery showrooms in USA and Middle East apart from those in India. The Boby Chemmanur Group has received BIS certification for purity of gold. Its schemes differ in relation to interest rate chargeable, amount advanced per gram of gold, tenure, amount of loan.

As of June 30, 2024, it operated through 270 branches located across 5 states namely Kerala, Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh managed through its registered office located at Thrissur, Kerala and it employed 1404 persons in business operations.

ISSUE DETAILS:
The company is coming out with its 4th debt issue of Secured, Redeemable, Non-i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. CCIL is spending Rs. 1.39 cr. for this debt issue process and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing and repayment/prepayment of borrowings with interest, and maximum up to 25% for general corporate purposes.

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd., and KFin Technologies Ltd. is the registrar of the issue. Mitcon Credentia Trusteeship Services Ltd. is the Debenture Trustee.

This debt offer has tenors of 367 days, 18 months, 24 months, 36 months, 60 months, and 70 months with coupon rates ranging from 9.50% to 12.00%. The interest payment frequency will be Monthly or Cumulative as per the series opted by the investors. Though it offers lucrative coupon rates, average rating of BBB- remains major concern.

ISSUE RATING:
This debt issue is rated IND BBB -/Stable by India Ratings & Research Pvt. Ltd. This rating indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions. These ratings are subjected to a periodic review during which it may be affirmed, changed, suspended, withdrawn, or placed on rating watch, based on one or more specific events.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, CCIL has posted a total income/net profit/ -(loss) of Rs. 74.74 cr. / Rs. 9.24 cr. (FY21), Rs. 73.49 cr. / Rs. 2.66 cr. (FY22), and Rs. 83.21 cr. / Rs. 0.80 cr. (FY23), Rs. 106.15 cr. / Rs. 1.72 cr. (FY24).

Its debt equity ratio as of March 31, 2024 was 6.21 will stand enhanced to 6.94 post issue. Its net NPA stood at 0.38% as of the said date

Conclusion / Investment Strategy

The company is primarily in gold loan segment. It has posted improved performance for FY24. However, though it offers lucrative coupon rates, IND BBB- /Stable rating that indicates moderate risk is the major concern. There is no harm in skipping it.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on July 25, 2024

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

The Chemmanur Credits and Investments NCD July 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Chemmanur Credits and Investments NCD July 2024 worth investing. The Chemmanur Credits and Investments NCD July 2024 Note sets the NCD expectations in systematic way which tells you if Chemmanur Credits and Investments NCD July 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Chemmanur Credits and Investments NCD July 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Chemmanur Credits July 24, NCD Issue review (Avoid)

Conclusion / Investment Strategy

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