Muthoolttu Mini Fin April 22 NCD issue review (May apply)

• MMFL is a Muthoottu Mini group arm engaged in gold loans and other financial services.
• This is the 17th offer from this company since February 2014.
• Last debt offer was in the month of December 2021.
• Issue rated as CARE BBB+/Stable. Such a rating indicates moderate risk in servicing.
• This time it has further lowered the coupon rates.

ABOUT COMPANY:
Muthoottu Mini Financiers Ltd. (MMFL) a Muthoottu Mini group company is a non-deposit taking systemically important NBFC 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, Telangana, Haryana, Maharashtra, Gujarat, Delhi and Goa and the union territory of Puducherry.

The company also has a microfinance loan segment wherein it provides unsecured loans to a joint liability group of women customers (minimum of 5 persons) who require funds to carry out their business activities through a few of its branches in the state of Kerala. MMFL's Gold Loan portfolio as on December 31, 2021, March 31, 2021, March 31, 2020, and March 31, 2019 comprises of 4,22,073, 3,86,110, 4,37,182, and 3,75,665 Gold Loan accounts respectively, aggregating to Rs. 2189.85 cr., Rs. 1935.10 cr., Rs. 1644.80 cr. and Rs. 1350.13 cr. which is 97.40%, 97.04%, 97.26%, and 97.50% of its total loans and advances on such specific dates. MMFL, as of March 31, 2022, had a network of 814 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Gujarat, Delhi and Goa and the union territory of Puducherry and we employ 3581 persons in our business operations.

ISSUE DETAILS:
For the purpose of onward lending and for repayment of interest and principal of existing loans (at least 75%) and also for general corporate fund needs (up to 25%), MMFL is coming out with its debt offer of secured, redeemable, non-convertible debentures of the face value of Rs.1000 each. The company is issuing NCDs aggregating up to Rs. 125 crores with an option to retain oversubscription up to Rs. 125 crores thus making overall issue sizes of Rs. 250 crores. The issue opens for subscription on April 20, 2022, and will close on or before May 17, 2022. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. MMFL is spending Rs. 4.00 cr. for mobilizing Rs. 250 cr.

This issue has a tenure of 480 days, 24 months, 36 months, 48 months and 66 months. It is offering coupon rates ranging from 8.00% to 9.50%. Interest payments mode is Monthly or Cumulative as per the choice of investors.

The issue is rated CARE BBB+/Stable by Care Ratings Ltd. It indicates that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk.

Vivro Financial Services Pvt. Ltd. is the sole lead manager for this offer. Mitcon Trusteeship Services Ltd. is the debenture trustee while Link Intime India Pvt. Ltd. is the registrar to the issue.

FINANCIAL PERFORMANCE:
For the last four fiscals, MMFL has posted a total income/net profit of Rs. 334.93 cr. / Rs. 14.25 cr. (FY18) and Rs. 298.15 cr. / Rs. 20.96 cr. (FY19), Rs. 313.15 cr. / Rs. 33.54 cr. (FY20) and Rs. 368.25 cr. / Rs. 31.91 cr. (FY21). For the 9M of FY22 ended on December 31, 2021, it has earned a net profit of Rs. 37.83 cr. on a total income of Rs. 314.10 cr.

As of December 31, 2021, its Net NPAs stood at 0.76% against 0.75% for FY21 end and 1.34% for FY20 end. Its current debt-equity ratio of 4.43 will stand enhanced to 4.90 post this issue.

Conclusion / Investment Strategy

This is a frequent debt market visitor company bringing its 17th offer since February 2014 and has changed its LM, Rating Agency, Trustee in the past. For this issue, it has reduced the coupon rates and average rating with moderate risk remains a major concern. Risk seeker/cash surplus investors may consider investment as per their appetite.

Review By Dilip Davda on April 19, 2022

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 Muthoottu Mini Financiers NCD April 2022 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Muthoottu Mini Financiers NCD April 2022 worth investing. The Muthoottu Mini Financiers NCD April 2022 Note sets the NCD expectations in systematic way which tells you if Muthoottu Mini Financiers NCD April 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoottu Mini Financiers NCD April 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.

Muthoolttu Mini Fin April 22 NCD issue review (May apply)

Conclusion / Investment Strategy

Review Author

Read more about Muthoottu Mini Financiers NCD April 2022