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• This is the 2nd Debt issue from CCIL since December 2022.
• It posted different set of performance for FY22 raising confusions.
• For the reported periods, its top line grew, but bottom line declined.
• CRISIL BBB-/Stable rating is considered to be of lower grade.
• There is no harm in skipping this debt issue.
ABOUT COMPANY:
Chemmanur Credits and Investments Ltd. (CCIL) is a part of Boby Chemmanur Group which is engaged in a diverse range of businesses and is based in Kerala, India. The group has retail gold jewellery showrooms in the USA and the Middle East apart from those in India. Currently, it offers various Gold Loan schemes to suit the individual needs of customers. CCIL offers Gold Loans for tenure ranging up to 180 days. The schemes differ in relation to interest rate chargeable, the amount advanced per gram of gold, tenure, and amount of loan. It also offers business loans under "Gramin Shakti Loan", thus serving small-scale business segments.
The company is primarily engaged in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the state of Kerala, Tamil Nadu, and Karnataka. It also provides Microfinance Loans, business and personal loans, money transfer services, and the distribution of third-party insurance products. It has been engaged in the lending business for more than 11 years and is based in Kerala, India.
For the three months ended June 30,2023, and financial year ended on March 31, 2023, March 31, 2022 and March 31, 2021, the Company held 0.85 tonnes, 0.86 tonnes, 0.87 tonnes and 0.87 tonnes of gold jewellery respectively, as security for all Gold Loans.
Under microfinance loan segment ("Microfinance Loans"), it provides unsecured loans to group of women customers (minimum of 5 persons) for their business and personal needs. Under the Joint Liability Group ("JLG") model, loans are provided to individual customers, however group guarantees the repayment of loans given to individual members of the group. Through this model, customers, who typically do not have collateral to take up loans, are able to gain access to credit.
As of September 30, 2023, it operated through 222 branches located across 5 states namely Kerala, Tamil Nadu, Karnataka, Maharashtra and Andhra Pradesh managed through registered office located at Thrissur, Kerala and employed 1,172 persons in its business operations.
ISSUE DETAILS:
The company is coming out with its 2nd debt issue of Secured, Redeemable, Non-convertible Debentures having a face value of Rs. 1000 each. The company plans to mobilize Rs. 50.00 cr. as a base issue and green shoe option to retain Rs. 50.00 cr. oversubscription, thus making an overall issue size of Rs. 100.00 cr. The issue opens for subscription on October 16, 2023, and will close on or before October 30, 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. CCIL is spending Rs. 1.51 cr. for this debt issue process and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing and repayment/prepayment of borrowings with interest, and maximum up to 25% for general corporate purposes.
The issue is solely lead managed by Vivro Financial Services Pvt. Ltd., and KFin Technologies Ltd. is the registrar of the issue. Mitcon Credentia Trusteeship Services Ltd. is the Debenture Trustee.
This debt offer has tenors of 366 days, 12 months, 18 monlths,24 months, 36 months, 60 months, and 74 months with coupon rates ranging from 9.50% to 11.50%. The interest payment frequency will be Monthly or Cumulative as per the series opted by the investors. Though it offers lucrative coupon rates, poor rating of BBB- and its declining trends for bottom line raises concern.
ISSUE RATING:
This debt issue is rated CRISIL BBB -/Stable by CRISIL Ltd. This rating indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions. These ratings are subjected to a periodic review during which it may be affirmed, changed, suspended, withdrawn, or placed on rating watch, based on one or more specific events.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, CCIL has posted a total income/net profit/ -(loss) of Rs. 74.74 cr. / Rs. 9.24 cr. (FY21), Rs. 73.49 cr. / Rs. 2.66 cr. (FY22), and Rs. 83.21 cr. / Rs. 0.80 cr. (FY23). For Q1 of FY24 ended on June 30, 2023, it posted a loss of Rs. - (0.26) cr. on a total income of Rs. 23.55 cr.
There are mismatch in its financial performance of FY22 giving confusing signals. (Refer page No. F20- 4, and page no. F-94). However, while its top line marked growth, its bottom line posted declining trends and raising concern.
Its debt equity ratio as of March 31, 2023 at 3.71 will get enhanced to 4.89 post this issue.
Review By Dilip Davda on October 11, 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 Chemmanur Credits and Investments NCD October 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 Chemmanur Credits and Investments NCD October 2023 worth investing. The Chemmanur Credits and Investments NCD October 2023 Note sets the NCD expectations in systematic way which tells you if Chemmanur Credits and Investments NCD October 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Chemmanur Credits and Investments NCD October 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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