Muthoot Finance Ltd NCD offer review - Sep 2015 (May apply)

Frequent visitor in debt market with its offer, Muthoot Finance Ltd (MFL) is once again tapping debt market with its offer of Rs. 250 crore secured/unsecured redeemable non-convertible debentures of Rs. 1000 each with a green shoe option to retain 100% oversubscription and thus raising the total size of the issue to Rs. 500 crore.

This is the thirteenth debt offer from MFL. It is offering NCDs having face value of Rs. 1000 each for a tenure ranging from 400 days to 60 months and is offering coupon rate ranging from 8.75% to 9.50% depending on tenure and the category. Category II and III i.e. Non-institution and Individuals are offered additional incentive of 0.75% across the tenure. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Unsecured NCDs have tenure of 84 months with a coupon rate ranging from 9.66% to 10.41%. Issue is lead managed by ICICI Securities Ltd and Edelweiss Financial Services Ltd. Link Intime India Pvt Ltd is the registrar to the issue. IDBI Trusteeship Services Ltd is the debenture trustee. Issue opens for subscription on 07.09.15 and will close on or before 07.10.15. Post allotment, NCDs will be listed on BSE. Allotment is available in physical and demat mode as desired by investors. However, trading will take place only in demat mode.

For last three fiscals its top and bottom line has shown declining trends from Rs. 538.71 crore/Rs. 100.42 crore (FY 2013) to Rs. 432.46 crore/Rs. 67.05 crore (FY 2015). As the company is primarily in gold loan segment, sliding gold prices has caused concern. Its current debt/equity ratio of 3.83% will rise to 3.93% post issue.

This issue is having ICRA AA- rating from ICRA indicating at high degree of safety regarding timely servicing of financial obligations. However, as per market perception, there are few takers for offers with such ratings.

Conclusion / Investment Strategy

Only risk avers and well informed investors may consider investment in this offer.

Review By Dilip Davda on November 22, 2019

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 prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

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.

Email: dilip_davda@rediffmail.com

The Muthoot Finance NCD July 2015 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Muthoot Finance NCD July 2015 worth investing. The Muthoot Finance NCD July 2015 Note sets the NCD expectations in systematic way which tells you if Muthoot Finance NCD July 2015 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoot Finance NCD July 2015 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Muthoot Finance Ltd NCD offer review - Sep 2015 (May apply)

Conclusion / Investment Strategy

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