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Frequent visitor to debt market for raising public money by way of Secured NCD Offer from South is once again coming out with its 12th offer for Rs. 150 crore with a green shoe option of retaining 100% oversubscription taking to Rs. 300 crore total fund mobilization.
Muthoot Finance Ltd (MFL) is the largest gold loan NBFC in India in terms of loan portfolio. It provides personal loans and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but are not able to access formal credit within a reasonable time, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements. MFL's Gold Loan portfolio as of December 31, 2014 comprised approximately 5.88 million loan accounts in India that we serviced through 4,256 branches across 21 states, the national capital territory of Delhi and four union territories in India. As of December 31, 2014, it employed 23,226 persons in its operations.
To meet its fund requirement for lending and other corporate funding purpose, the company is offering NCD having face value of Rs. 1000 and minimum lot to be applied is 10 NCDs and in multiples of 1 NCD thereon, thereafter. Issue is solely managed by ICICI Securities Limited and Link Intime India Private Limited is the registrar to the issue while IDBI Trusteeship Services Limited is the debenture trustee. Issue opens for subscription on 25.03.15 and will close on or before 27.04.15. This issue is graded ICRA AA- (AA minus) by ACRA indicating a high degree of safety timely servicing of financial obligations. Such instruments carry very low credit risk. Investors can apply for this offer in physical or demat mode as per individual choice, however, the trade will take place only in demat mode. Post allotments, these NCDs will be listed on BSE.
Tenure for this offer is 400 days, 24 months, 36 months and 60 months while coupon rate is ranging from 9.50% to 10% payable Monthly, Annually or Cumulative as per the option selected by the investor. Category II (Non institutional) and III (Individuals) will get additional 0.75% incentive and thus the yield from this investment will range from 10.05% to 10.80% based on options selected.
In line with the general trends of the industry, for the fiscal 2013-14 the company has suffered set back in top and bottom line with total income sliding to Rs. 494.74 crore from Rs. 538.71 crore and net profit to Rs. 78.01 crore from Rs. 100.42 crore for a year-ago period. Company's debt has been rising for past few quarters. Its current debt-equity ratio of 4.58 will rise to 4.65 times post this issue.
However, the company has a loyal family of investors from the southern region and hence may get the planned funds. Those who are looking at interest income as interest rates are set for cooling off going forward, they may consider moderate investment.
Review By Dilip Davda on December 9, 2019
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 March 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 March 2015 worth investing. The Muthoot Finance NCD March 2015 Note sets the NCD expectations in systematic way which tells you if Muthoot Finance NCD March 2015 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoot Finance NCD March 2015 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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Are you sure on debt equity ratio part? As in will this directly add to debt? BecaI had some high yielding bonds (13%+) which are maturing in this April. My feeling is Muthoot is simply replacing that debt with low yielding one. So Debt equity will remain more or less same. Its just a feeling, no inside info.