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• AFL, a Kirloskar Group's finance arm is taping the debt market with its maiden offer.
• It has posted consistent growth in its loan book for the reported periods.
• The company has just around five years working performance.
• Well-informed Investors looking for steady income may park funds for the medium term.
ABOUT COMPANY:
Arka Fincap Ltd. (AFL) - formerly known as Kirloskar Capital Ltd.- is an NBFC-ML registered with RBI. It is a professionally managed organization, a part of the Kirloskar Group, primarily engaged in providing structured term financing solutions to corporates, real estate and urban infra financing, loans to micro, small and medium enterprise ("MSME") and personal finance loans to borrowers in India. With its focus on customers, experienced management team and vigilant monitoring of its assets, business has experienced growth since the commencement of operations in Fiscal 2019.
The company operates four principal lines of business, namely corporate lending, real estate and urban infra financing, MSME lending and personal lending. AFL's total Loan Book as of September 30, 2023, March 31, 2023, March 31, 2022 and March 31, 2021 was Rs. 4033.19 cr., Rs. 3960.27 cr., Rs. 2379.88 cr., and Rs. 1124.33 cr., respectively.
As of September 30, 2023, its distribution network included approximately 150 personnel in in-house sales team, and approximately 700 third-party direct sales associates (the "DSAs") and other third-party intermediaries who are empaneled with it. The company also has tie-ups with four fintech companies and two NBFCs for co-lending. AFL at present in the 11 states i.e. Maharashtra, Karnataka, Delhi, Tamil Nadu, Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Andhra Pradesh Telangana and Gujarat and operate out of 26 branch offices.
As of September 30, 2023, it has served approximately 30,000 active customers. AFL believes that its customer-centric business model allows it to retain a high proportion of existing customers and to attract new customers. During the past three financial years, its focus has been on retaining existing borrowers, whilst consciously adding new borrowers. It follows a multi-pronged approach to customer engagement. As of September 30, 2023, it had 326 employees.
ISSUE DETAILS:
The company is coming out with its maiden debt offer of Secured, Rated, Listed, Redeemable, Non-Convertible Debentures of face value of Rs. 1000 each. Under Tranche-I, it is issuing NCDs worth Rs. 300 cr. including a base size of Rs. 150 cr. It has a shelf limit of Rs. 500 cr. The issue opens for subscription on December 07, 2023, and will close on or before December 20, 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 only.
The company is spending Rs. 5.95 cr. for this debt offer of Rs. 300 cr., and out of net proceeds, it will utilize at least 75% for onward lending, financing and for repayment of existing borrowings, and maximum up to 25% for general corporate purposes.
The joint Lead Managers to this offer are JM Financial Ltd., Nuvama Wealth Management Ltd., while Link Intime India Pvt. Ltd. is the registrar of the issue. Catalyst Trusteeship Ltd. is the Debenture Trustee.
This debt offer has tenors of 24 months, 36 months and 60 months and interest payment frequency shall be Quarterly or Annual as per the series opted by the investors. It is offering a coupon rates ranging between 9.00% to 10.00%. The company has allocated 25% for all the four categories i.e. Institutions, Non- Institutions, HNIs and Retail investors.
CREDIT RATIMG:
This debt offer is rated as CRISIL AA - /Positive (pronounced as CRISIL double A minus rating with Positive outlook) by CRISIL Ratings Ltd.
Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
The rating is not a recommendation to buy, sell or hold the rated instrument and CRISIL Ratings Limited does not comment on the market price or suitability for any particular investor and investors should take their own decisions. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The rating agency has a right to suspend or withdraw the rating at any time on the basis of factors such as new information. In case of any change in credit ratings till the listing of NCDs, the Company will inform the investors through public notices/ advertisements in all those newspapers in which pre issue advertisement has been given.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, AFL has posted a total income/net profit of Rs. 48.43 cr. / Rs. 6.09 cr. (FY20), Rs. 102.93 cr. / Rs. 16.88 cr. (FY21), Rs. 203.09 cr. / Rs. 32.52 cr. (FY22), and Rs. 372.89 cr. / Rs. 61.36 cr. (FY23). As per unaudited results, for H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 35.32 cr. on a total income of Rs. 258.48 cr.
As of September 30, 2023, its net NPAs stood at 0.05%. Its debt equity ratio of 2.76 as of September 30, 2023, will stand enhanced to 3.20 post this issue. As of the said date, its current paid-up equity capital of Rs. 928.73 cr. is supported by free reserves of Rs. 213.22 cr.
Review By Dilip Davda on December 1, 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 Arka Fincap NCD Tranche I Nov 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 Arka Fincap NCD Tranche I Nov 2023 worth investing. The Arka Fincap NCD Tranche I Nov 2023 Note sets the NCD expectations in systematic way which tells you if Arka Fincap NCD Tranche I Nov 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Arka Fincap NCD Tranche I Nov 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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