Published on Tuesday, May 22, 2018 by Dilip Davda
JM Financial Credit Solutions Ltd. (JMFCSL) is a systematically important non-deposit taking non-banking financial arm of JM Financial group. It is engaged in providing integrated financial solutions to real estate developers with a focus on residential project financing. As on 31.03.18, it has a list of 77 borrowers, loan order book of Rs. 7339 crore, net NPA stood at 0.9% and debt equity ratio of 3.2 .It is serving borrowers from Mumbai, Pune, Bengaluru, Chennai, Hyderabad, NCR and Kolkata. Its loan tenure ranges from 28 to 48 months and the biggest ticket size is Rs. 95.4 crore. For last three fiscals it has posted CAGR of 34.2% in its loan book, 28.4% in net total income and 28.9% in profit after tax. For FY18 it posted total income of Rs. 960 crore with a net profit of Rs. 328 cr.
JMFCSL is coming with its maiden debt offer by way of Tranche I of secured, rated, listed redeemable non-convertible debentures having face value of Rs. 1000 each to mobilize Rs. 300 crore. It has a green shoe option to retain oversubscription upto Rs. 450 crore thus making the total issue size of Rs. 750 crore. This size is within the shelf limit of Rs. 2000 crore. 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. Issue opens for subscription on 28.05.18 and will close on or before 20.06.18. Post allotment, these debentures will be listed on BSE. Issue is available for allotment only under demat mode. Funds mobilized through this offer will be used for business activities/repayment-prepayment of existing borrowings (75%) and general corpus fund (25%).
Issue Structure is as under: (with details of tenure, coupon rates and effective yields)
In Option 1, interest will be paid on an annual basis at a rate of 9.25%; and the tenor is 38 months. The Effective Yield (per annum) is 9.26%.
In Option II, interest will be paid on a cumulative basis and the tenor is 38 months. The redemption amount per NCD is Rs. 1,323.39.
In Option III, interest will be paid on anannual basis at a rate of 9.50% and the tenor is 60 months. The Effective Yield (per annum) is 9.49%.
In Option IV,interest will be paid on a monthly basis at a rate of 9.11% and the tenor is 60 months. The Effective Yield (per annum) is 9.49%.
In Option V, interest will be paid on an annual basis at a rate of 9.75% and the tenor is 120 months. The Effective Yield (per annum) is 9.74%.
In Option VI, interestwill be paid on a monthly basis at a rate of 9.34% and the tenor is 120 months. The Effective Yield (per annum) is 9.74%.
[Category IV Investors (Retail Individual Investors) are defined as Resident Indian individuals and HUFs through the Karta applying for an amount aggregating for an amount up to and including Rs. 10 lakh, across all Series of NCDs. Category III Investors (High Net-worth Individuals or HNIs) Investors are Resident Indian individuals and HUFs through the Karta applying for an amount above Rs. 10 lakh, across all Series of NCDs].
Company will give interest @8% on allotment money and @5% on refund amount.
Allotment will be made on “first come-first served basis”. This issue is rated ICRA AA/Stable by ICRA and IND AA/Stable by India Rating. These ratings indicate high degree of safety regarding timely servicing of financial obligations. Issue is lead managed by A.K. Capital Services Ltd., JM Financial Ltd., Edelweiss Financial Services Ltd. and Trust Investment Advisors Pvt. Ltd. IDBI Trusteeship Services Ltd. is the Debenture Trustee and Karvy Computershare Pvt. Ltd. is the registrar to the issue.
Conclusion: Investors looking at steady interest income for long term may consider investment in this AA/stable rated debt issue. (Subscribe).
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.
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