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• This is the 8th debt issue from SFL since March 2015.
• The last debt issue was in the month of February 2024.
• This debt offer carry ICRA/BBB stable rating, which is a bit risky.
• The company has posted average financial performance for the reported periods.
• There is no harm in skipping this a bit risky debt issue.
ABOUT COMPANY:
Sakthi Finance Ltd. (SFL) is an Investment and Credit company with primary focus on financing pre-owned commercial vehicles. It also provides finance for purchasing infrastructure construction equipment, multi-utility vehicles, cars, jeeps and other machinery. The finances provided are secured by lien on the assets financed. SFL's target customers predominantly comprise Small / Medium Road Transport Operators ("SRTOs / MRTOs") and primarily hail from rural / semi-urban area. The SRTOs / MRTOs looks for speedy disposal of finance at competitive rates.
It has identified this opportunity and positioned itself between the organized banking sector and local money lenders by offering the finance at competitive rate with flexible and speedy lending services to customers. The company operates primarily in the Southern region of the country mainly in the States of Tamil Nadu and Kerala through its branch network and customer service points. It has network of 54 branches, located in Tamil Nadu, Kerala, Andhra Pradesh, Karnataka, Maharashtra, Haryana and Union Territory of Puducherry. In addition to finance business, it generates power from windmills and sell it to Tamil Nadu Electricity Board and Gujarat Urja Vikas Nigam Limited. At present, it has 17 windmills with an aggregate capacity of 5,150 kW located in the States of Tamil Nadu and Gujarat. As of April 30, 2024, it had 680 employees on its payroll.
ISSUE DETAILS:
The company is coming with its 8th debt offer of rated, secured, redeemable non-i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE.
The company is spending Rs. 4 cr. for this NCD issue process, and from the net proceeds, it will utilize at least up to 75%for onward lending, financing and for repayment/prepayment of certain borrowing including interest, and up to 25% for general corporate purposes.
This debt issue is solely lead managed by Bonanza Portfolio Ltd., Link Intime India Pvt. Ltd. is the registrar to the issue and Catalyst Trusteeship Ltd. is the debenture trustee.
The company offers coupon rates ranging from 9.00% to 10.25% with a scheme tenor of 24 months, 36 months, 60 months and 85 months with an interest payment frequency as Monthly, and Cumulative.
CREDIT RATING:
This debt offer is rated ICRA/BBB Stable by ICRA Ltd. The rating of the NCDs by ICRA indicates moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. The Credit rating given by ICRA Limited is valid as on the date of this prospectus and shall remain valid until the rating is revised or withdrawn. The rating provided by ICRA may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. This rating is not a recommendation to buy, sell or hold the NCDs and investors should take their own decisions.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 171.34 cr. / Rs. 9.26 cr. (FY21), Rs. 181.35 cr. / Rs. 9.52 cr. (FY22), and Rs. 191.94 cr. / Rs. 12.49 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 11.52 cr. on a total income of Rs. 152.59 cr.
Its Net NPAs were 2.85%, 2.95% 2.14%, and 2.30%, as of December 31, 2023, March 31, 2023, March 31, 2022, and March 31, 2021, respectively. Its debt equity ratio of 6.16 as of December 31, 2023, will stand enhanced to 6.96 post this debt issue. As of the said date, its capital adequacy ratio was at 18.01% and its paid-up equity capital of Rs. 64.71 cr. was supported by free reserves of Rs. 131.80 cr.
Review By Dilip Davda on June 19, 2024
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 Sakthi Finance NCD June 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 Sakthi Finance NCD June 2024 worth investing. The Sakthi Finance NCD June 2024 Note sets the NCD expectations in systematic way which tells you if Sakthi Finance NCD June 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Sakthi Finance NCD June 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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