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JM Fin Pro NCD Tranche-1 issue review (May apply)

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•    This is the 4th debt offer from JMFPL since April 2019. 
•    It has shown de-growth in its financial performance for the last few quarters.
•    The sector is witnessing high competition amidst subdued sentiment.
•    Rating agencies may withdraw/suspend or revise their ratings at any time. 

ABOUT COMPANY:
JM Financial Products Ltd. (JMFPL), a JM Financial group company, is a systemically important non-deposit taking NBFC registered with RBI. It focuses on offering a broad suite of loan products that are customized to suit the needs of corporates, institutions, SMEs and individuals. Our Company broadly operates under the following verticals viz. (i) Bespoke financing; (ii) Real estate financing; (iii) Capital market financing; (iv) Retail mortgage financing; and (v) Financial institution financing. The company has a network of 40 branches and 253 employees as of June 30, 2021. 

In addition to the above, it has ventured into a digital-led real estate broking/consulting business under the brand "Dwello". It has also entered the housing finance business through its Subsidiary, JMFHL. JMFHL has been granted a license to operate as a housing finance company by the National Housing Bank of India in Fiscal 2018. The focus of the housing finance business would be to provide home loans to retail customers with a focus on the affordable housing segment. The company has also entered into the institutional fixed income business. The focus of the business is on mobilizing debt capital for corporates by way of distribution to various investor segments, sales and distribution in secondary bond markets and credit research.

ISSUE DETAILS:
The company is coming out with its 4th Debt offer since April 2019. The issue is for Secured redeemable Non - Convertible Debentures (NCDs) having a face value of Rs.1000 each. JMFPL is planning to mobilize under Tranche-1 base size of Rs. 100 cr. with a greenshoe option of Rs. 400 cr. making the overall issue size of Rs. 500 cr. The company has a shelf limit of Rs. 1500 cr. for this debt offering. The issue opens for subscription on September 23, 2021, and will close on or before October 14, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. The company will be spending around Rs. 16.87 cr. for mobilizing Rs. 500 cr. from this debt offering. 

From the net proceeds of the issue, the company plans to utilize up to 75% for onward lending, financing, repayment/prepayment of certain borrowings with interest and up to 25% for general corporate purposes. 

This debt offer has tenures of 39 months, 60 months and 100 months with monthly or annual interest payment options as per the series opted by the investors. This offer carries coupon rates ranging from 7.91% to 8.30%. 

This Tranche-1 issue is rated ICRA/AA (Stable) by ICRA Ltd. and CRISIL AA/(Stable) by CRISIL Ltd. This rating indicates a high degree of safety regarding timely servicing of financial obligations. However, both rating agencies have indicated that the ratings provided by them may be suspended, withdrawn or revised at any time by them and cannot be considered as an invitation to subscribe to this issue. 

The issue is jointly lead managed by Equirus Capital Pvt. Ltd. and JM Financial Ltd., IDBI Trusteeship Services Ltd. is the debenture trustee and KFin Technologies Pvt. Ltd. is the registrar to the issue. 

FINANCIAL PERFORMANCE:
On the financial performance front, JMFPL has reported a total income/net profit of Rs. 660.65 cr. / Rs. 137.63 cr. for FY21. For the first quarter of FY22 ended on June 30, 2021, it has earned a net profit of Rs. 23.86 cr. on a total income of Rs. 139.48 cr. As of June 30, 2021, its paid-up equity capital of Rs. 544.50 cr. is supported by free reserves of Rs. 1308.18 cr. As of the same date, its net NPA stood at 0.98% and the debt-equity ratio was 1.88 that will stand enhanced to 2.69 post this issue. 


Conclusion / Investment Strategy

The group is a well-known entity in the stock market, its financial performance has marked de-growth in the last few quarters following the pandemic. Though this debt offer is rated AA/Stable by renowned rating agencies and coupon rates are in line with ratings, currently we are witnessing a lukewarm response to many recent debt offers as general sentiment for such instruments are subdued. Investors looking for a steady income may consider investment according to their appetite.

Review By Dilip Davda on Sep 22, 2021

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 before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(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 Sep 2021 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 Sep 2021 worth investing. The JM Financial NCD Sep 2021 Note sets the NCD expectations in systematic way which tells you if JM Financial NCD Sep 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in JM Financial NCD Sep 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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