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KLM Axiva Feb - March 2022 NCD issue review (Avoid)

KLM Axiva Finvest Limited Logo

•    This is the 6th debt offer from KLMAFL since September 2018. 
•    Last debt offer was in Sept-Oct. 2021. 
•    The company has not given any financial data for Q3 of FY22.
•    CARE has given a BB+/Stable rating to this debt offer, which is poor.

ABOUT COMPANY:
KLM Axiva Finvest Ltd. (KLMAFL) (erstwhile known as Needs Finvest Ltd.) is a non-deposit taking systemically important non-banking finance company ("NBFC") primarily serving low and middle-income individuals and businesses that have limited or no access to formal banking and finance channels.

As of December 31, 2021, we operate through 342 branches across four states namely Kerala, Karnataka, Tamil Nadu and Telangana managed through our corporate office located at Kochi.

As of December 31, 2021, it had 995 full-time employees. In addition, the company had temporary sales, marketing and recovery personnel who work on a commission basis. KLMAFL adhere to a policy of nurturing dedicated talent by conducting regular training programmes. It provides training to employees both as a commitment to their career development and also to ensure quality service to customers. These training are conducted on joining as part of employee initiation and include additional on-the-job training.

The company also has a wholly-owned subsidiary, namely KMLM Financial Services Limited., and three group companies i.e. KLM Tianna Gold & Diamonds Pvt. Ltd., Payyoli Granites Pvt. Ltd. and Ente Nadu Nidhi Ltd. 

KLMAFL offers gold loans, MSME loans, Personal Loans, Microfinance loans, vehicle loans etc. 

ISSUE DETAILS:
The company is coming out with its fifth debt offer since September 2018. The company will be issuing secured redeemable non-convertible debentures of Rs. 1000 each. The base size of the issue is Rs. 100 cr. and it has an option to retain oversubscription to the tune of Rs. 100 cr. thus making a total issue size of Rs. 200 cr. The issue opens for subscription on February 15, 2022, and will close on or before March 11, 2022. Minimum application is to be made for 5 NCDs (i.e. Rs. 5000.00) and in multiples of 1 NCD (i.e. Rs. 1000.00) thereon, thereafter. Post allotment, these NCDs will be listed on BSE only. The company will be spending Rs. 1.31 cr. for this entire issue process. 

From the net proceeds, the company will use at least 80% for onward lending, financing and repayment/prepayment of principal and interest on existing borrowings and up to 20% for general corporate purposes. 

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd., while Vistra ITCL (India) Ltd. is the debenture trustee. KFin Technologies Pvt. Ltd. is the registrar to the issue. 

The company is offering coupon rates ranging from 9.75% to 11.25%. It has tenure ranging from 366 days, 400 days, 18 months, 2 yrs., 3 yrs., 5 yrs. and 80 months. It offers Monthly, Annually and Cumulative interest payment mods based on series and tenure. 

This debt offering is rated CARE BB+ Stable by CARE Ratings Ltd. The rating of NCDs by CARE Ratings indicates that instruments with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations. Issues with such ratings are always neglected by investors in general. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last two fiscals, KLMAFL has (on a consolidated basis) posted a total income/net profit of Rs. 102.25 cr. / Rs. 0.53 cr. (FY20) and Rs. 126.52 cr. / Rs. 7.14 cr. (FY21).  

Its debt-equity ratio of 5.96 (on a standalone basis) as of September 30, 2021, will rise to 7.31 post this debt issue. For the year ended March 31, 2021, its net NPA stood at 4.77% which was 4.47% for FY19 end. As of the said date, it's paid-up equity capital of Rs. 67.93 cr. was supported by free reserves of Rs. 28.67 cr. The company has not given any financial data for the quarter that ended on December 31, 2021, and is a bit surprising. 

Its net NPA stood at 3.38% as of September 30, 2021, against 4.77% as of March 31, 2021. 


Conclusion / Investment Strategy

KLM Axiva has emerged as a frequent visitor to the debt market offerings. This time it has reduced the coupon rates on the lower side. Its post-issue debt-equity ratio raises concern. It has not given financial data for the 3rd quarter of FY22 and raises concern. There is no harm in ignoring this debt offer with lucrative coupon rates as it has poor rating.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 12, 2022

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 KLM Axiva Finvest NCD February 2022 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if KLM Axiva Finvest NCD February 2022 worth investing. The KLM Axiva Finvest NCD February 2022 Note sets the NCD expectations in systematic way which tells you if KLM Axiva Finvest NCD February 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in KLM Axiva Finvest NCD February 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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