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JM Fin Prod Tranche-II NCD issue review (Subscribe)

  • JMFPL is a NBFC of JM Finance group.
  • This is the second debt offer from this company since April 2019.
  • JMFPL is offering lucrative coupon rates, but are lower than the maiden offer.
  • This issue is rated as ICRA AA and CRISIL AA/Stable.
  • Post allotment, NCDs will be listed on BSE.

About Company

JM Financial Products Limited (JMFPL) is a "Systemically Important Non - Deposit Taking NBFC" (NBFC-ND-SI) registered with the Reserve Bank of India and operates as the flagship company under the "JM Financial" brand. Incorporated as J.M. Lease Consultants Private Limited on July 10, 1984. The Company has broadened its services from lease syndication and vehicle leasing to offering financial solutions through lending, syndication, participation in lending for securities issuance and distribution. Currently JMFPL has focused on offering a broad suite of secured and unsecured loan products which are customized to suit the needs of the corporates, SMEs and individuals. It broadly operates under four verticals viz. (i) fixed income division (structured financing) ("FID (structured financing)"); (ii) fixed income division (real estate financing) ("FID (real estate financing)"); (iii) capital market financing; and (iv) SME financing.

The company also offers unsecured loans to customers on the basis of their creditworthiness. The purpose of funds could be for the purpose of working capital requirement for business and/ or for purposes acceptable to the Company. In addition JMFPL has ventured into real estate broking business under the brand name "Dwello". Through Dwello, it operates primarily in the residential real estate segment and assists buyers during all the stages of their real estate buying cycle. Further, it has entered in the housing finance business through Subsidiary, JMFHL. The focus of housing finance business would be to provide home loans to retail customer with a focus on affordable housing segment.

Issue Details

The company is coming up with an issue of 1000000 Secured Redeemable Non-Convertible Debentures ("NCDs") of the face-value of ₹1000 each. The NCD Issue aggregates to ₹100 crore, with an option to retain over-subscription up to ₹400 crore for issuance of additional NCDs, aggregating up to a total of ₹500 crore. The NCD Issue opens on 06th August 2019, and will close on or before 04th Sept 2019. The company has a shelf limit of ₹2000 crore.

These NCDs has tenures of 38 months, 60 months, and 84 months. Coupon rates shall be ranging from 9.85% to 10.30% p.a., payable monthly, annually or cumulative as per the choice of investors. Allotment will be on "First come - First Served" basis.

Net proceeds of the issue will be utilized for the purpose of onward lending, financing, and for repayment /prepayment of interest and principal of borrowings of the Company (up to 75%) and for general corpus fund (up to 25%).

The specific terms of the Secured NCDs are mentioned below

Terms and conditions in connection with Secured NCDs****Series

I

II

III

IV

V

Frequency of Interest Payment

Annual

Cumulative

Annual

Monthly

Cumulative

Who can apply

All category of investors can subscribe to all Series of NCDs

Minimum Application

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

In multiples of thereafter

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

Face Value of Secured NCDs (₹/ NCD)

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

Issue Price (` / NCD)

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

Tenor from Deemed Date of Allotment

38 months

38 months

60 months

60 months

84 months

Coupon Rate (% per annum)

10.20%

N.A.

10.30%

9.85%

N.A.

Effective Yield (Per annum)

10.21%

10.20%

10.29%

10.30%

10.40%

Mode of Interest Payment

Through various options available

Redemption Amount (₹/ NCD****

₹1,000

₹1,360.54

₹1,000

₹1,000

₹2,000/-

Maturity Date (From Deemed Date of Allotment)

38 months

38 months

60 months

60 months

84 months

Nature of indebtedness

Secured rated listed non-convertible debentures

Put

N.A.

N.A.

N.A.

N.A.

N.A.

Call (anytime after the months to expire from the Deemed Date of Allotment)

N.A.

N.A.

36 months

36 months

N.A.

Minimum application is to be made for 10 NCDs (i.e. ₹10000) and in multiple of 1 NCD (i.e. ₹1000) thereon, thereafter.

The NCDs to be issued have been rated 'ICRA AA stable and CRISIL AA/Stable. The rating of NCDs indicates high degree of safety regarding timely servicing of financial obligations.

The Secured NCDs offered through the issue are proposed to be listed on the BSE. The issue is jointly managed by A K Capital Services Ltd., JM Financial Ltd. and Trust Investment Advisors Pvt. Ltd. while Karvy Fintech Pvt. Ltd. is the registrar to the issue. IDBI Trusteeship Services Ltd.; is the Debenture Trustee.

Financial Performance

The company derives a significant portion of its revenue from interest income, which represented 90.2% and 82.5% of total revenues in Fiscal 2019 and the three months period ended June 30, 2019 respectively. As of March 31, 2019 and the three months period ended June 30, 2019, JMFPL's gross NPA ratios were 0.1% and 0.1% respectively, while net NPA ratios were 0.1% and 0.1% respectively.

JMFPL's loan book stood at ₹5503.04 cr. as on 30.06.19 against ₹5226.60 cr. as on 31.03.19.

It recorded total income / net profits of ₹949.40 cr. / ₹204.30 cr. (FY19) and ₹239.90 cr. / ₹61.90 cr. for the first quarter ended on 30.06.19. Its RoA stood at 3.1% and 3.7% while RoE at 13.5% and 15.6% respectively for the said periods.

Its current debt equity ratio of 3.4 as on 30.06.19 will stand enhanced to 3.7 post this issue (based on ₹500 crore total size).


Conclusion / Investment Strategy

Investors looking for steady long term fixed returns may consider investment in this debt offer from JM Finance Group Company. (Subscribe).

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 5, 2019

Review Author

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, a freelance journalist

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.

Email: dilip_davda@rediffmail.com

The JM Financial NCD Aug 2019 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if JM Financial NCD Aug 2019 worth investing. The JM Financial NCD Aug 2019 Note sets the NCD expectations in systematic way which tells you if JM Financial NCD Aug 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in JM Financial NCD Aug 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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