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• VCL is an NBFC engaged in providing financial services to mid-corporates and individuals in urban/semi-urban areas.
• Due to other income its FY22 earnings boosted.
• For FY23 it posted a loss despite growth in its top line.
• The issue is rated A positive/stable by ICRA and CARE.
• The company offers lucrative coupon rates.
• Investors looking for steady income for the medium term may consider investment.
ABOUT COMPANY:
Vivriti Capital Ltd. (VCL) is registered with the RBI as a non-deposit-taking systemically important non-banking financial company (NBFC-NDSI). The company was incorporated on June 22, 2017, in Chennai, India. It offers lending products to mid-corporates. Such products include term loans, working capital demand loans, co-lending with financial partners, securitization of receivables, direct assignment of receivables, supply chain finance and subscription to bonds and commercial paper.
The company covers a diversified demographic of clients through its lending products and provides access to financial services by leveraging technology and offering customized financial solutions to clients. VCL's target clients comprise entities that are either unrated or have ratings that do not permit clients to have easy access to banking finance and primarily hailing from urban/ semi-urban areas. It extends debt finance to mid-corporates across sectors including, without limitation, companies in the business of healthcare, pharma, logistics, retail, trading, steel, auto, manufacturing, financial services and fast-moving consumer goods. The ticket size of these loans ranges from Rs.0.10 lakh to Rs. 8,000.00 lakhs, with an average ticket size of less than Rs. 350.00 lakh. The loan tenure is determined by the profile of the borrower and the collateral, with the tenure ranging from 1 month to 48 months.
As of March 31, 2023, it had total outstanding loan assets of Rs. 450,873.24 lakh and investments in bonds, securitizations and commercial paper of Rs. 132,706.77 lakhs. For the Financial Years ended March 31, 2023, March 31, 2022, and March 31, 2021, its portfolio yields representing interest income as a percentage of average outstanding loan and investment assets (in the categories as provided above) for the same period was 14.19%, 13.79% and 14.00%, respectively.
It had an AUM of Rs. 583,580.01 lakhs as of March 31, 2023, and Rs. 381,686.09 lakhs as of March 31, 2022, across 194 mid-corporates and 13.21 lakh borrowers/ clients through co-lending arrangements and 24 Anchors covering 183 MSME and non-MSME counterparties for supply chain finance as of March 31, 2023.
As of March 31, 2023, the company had five regional offices in India in the states of Tamil Nadu, Maharashtra, Karnataka, Rajasthan, and Delhi. VCL has seven subsidiaries namely, VAMPL, CAPL, CredAvenue Securities Private Limited, Bluevine Technologies Private Limited, Spocto Solutions Private Limited, CredAvenue Spocto Technology Ltd and Finfort Infotech LLP.
It benefits from a large and diversified mix of lenders which has increased over the years and included 218 institutional lenders/investors as of March 31, 2023, comprising a range of financial institutions and corporates, as well as 1,740 individual investors pursuant to the issue of non-convertible securities as of March 31, 2023, to meet capital requirements. As of March 31, 2023, it had 205 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its maiden debt offer of Secured, Rated, Listed, Redeemable non-convertible debentures having a face value of Rs. 1000 each to mobilize Rs. 500 cr. The base size of the issue is Rs. 250 cr. and it has a green shoe option to retain oversubscription to the tune of Rs. 250 cr. The issue opens for subscription on August 18, 2023, and will close on or before August 31, 2023. The minimum application to be made is for 10 NCDS (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. VCL is spending Rs. 11.61 cr. for this debt offer and from the net proceeds, it will utilize at least 75% for onward lending, financing and repayment of existing borrowings with interest and a maximum of up to 25% for general corporate purposes.
The company has allocated 20% for Institutional, 20% for Non-institutional, 30% for HNIs and 30% for Retail investors.
This debt offer has tenors of 18 months and 24 months. The interest payment frequency is Monthly, Annual, and Quarterly and the coupon rates range between 9.57% to 10.50% as per the selection of series by the investor. It has no call/option.
This issue is solely lead managed by JM Financial Ltd. and Integrated Registry Management Services Pvt. Ltd. is the registrar of the issue. Catalyst Trusteeship Ltd. is the Debenture Trustee.
FINANCIAL PERFORMANCE:
The financial statement pages are non-readable in the offer documents; all pages (F-1 to F-331, in particular) are garbled.
As per the consolidated -restated financial data given on page no. 108 to 111, VCL has posted a total income/net profit - (loss) of Rs. 245.67 cr. / Rs. 14.42 cr. (FY21), Rs. 2417.28 cr. / Rs. 1553.27 cr. (FAY22), and Rs. 703.59 cr. / Rs. - (121.70) cr. (FY23). Its FY22 income included other income of Rs. 2012.31 cr. For FY23, though its top line grew, it posted a negative bottom line that raised concerns. For Q1 of FY24 ended on June 30, 2023, on a standalone basis, it earned a net profit of Rs. 51.86 cr. on a total income of Rs. 238.47 cr. On a standalone basis, the company has posted a total income/net profit of Rs. 225.12 cr. / Rs. 30.01 cr. (FY21), Rs. 351.67 cr. / Rs. 67.37 cr. (FY22), and Rs. 671.21 cr. / Rs. 129.30 cr. (FY23).
Its debt-to-total asset ratio stood at 70.06% as of June 30, 2023. Its net NPA as of March 31, 2023, was at 0.09%, and its debt-equity ratio was 3.25.
CREDIT RATING:
This debt issue is rated ICRA-A/stable by ICRA Ltd. and CARE-A (positive) by CARE Ratings Ltd. Ratings issued by ICRA Limited and CARE Ratings Limited will continue to be valid for the life of the instrument unless withdrawn or reviewed. Instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. The rating provided by ICRA Limited and Care Ratings Limited may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions.
Review By Dilip Davda on August 12, 2023
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 Vivriti Capital NCD August 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Vivriti Capital NCD August 2023 worth investing. The Vivriti Capital NCD August 2023 Note sets the NCD expectations in systematic way which tells you if Vivriti Capital NCD August 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Vivriti Capital NCD August 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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