KLM Axiva July 24 NCD Issue review - (Avoid)

•    This is the 10th debt offer from the company since September 2018.
•    The last debt offer was in the month of August 2023.
•    It has posted steady growth in its financial performance.
•    There is no harm in skipping this poorly rated debt offer that carry moderate risk.

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 on June 30, 2024, it operates through 670 branches across six states namely Kerala, Karnataka, Tamil Nadu, Telangana, Andhra Pradesh and Maharashtra managed through corporate office located at Kochi. As of the said date, it had 2344 employees on its payroll and additional temporary employees on a commission basis. 

It provides training to employees both as a commitment to their career development and also to ensure quality service to customers. These trainings are conducted on joining as part of employee initiation and include additional on-the-job trainings. 

ISSUE DETAILS:
The company is coming out with its 10th debt offer since September 2018. The company will be issuing secured redeemable non-i.e. Rs. 1000.00) thereon, thereafter. Post allotment, these NCDs will be listed on BSE only. 

The company will be spending Rs. 1.47 cr. for this entire issue process. From the net proceeds, the company will use at least 75% for onward lending, financing, and repayment/prepayment of principal and interest on existing borrowings and a maximum of up to 25% for general corporate purposes. 

Vivro Financial Services Pvt. Ltd., is the sole lead manager for this issue and 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 9.50% to 11.00%. It has tenure ranging from 400 days, 16 months, 18 months, 2 yrs., 3 yrs., 5 yrs., and 79 months. It offers Monthly, Annually, and Cumulative interest payment mods based on series and tenure. 

CREDIT RATING:
The debt offering is rated ACUITE BBB / Stable by Acuite Ratings and Research Ltd. and IND BBB - / Stable by India Ratings and Research Pvt. Ltd. The rating of NCDs by India 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. 

The rating given by Acuité Ratings is valid as on the date of this Prospectus and shall remain valid on date of the issue and allotment of NCDs and the listing of the NCDs on BSE. The rating given by India Ratings are valid as on the date of this Prospectus. The ratings provided by rating agencies may be suspended, withdrawn or revised at any time by the assigning rating agency on the basis of new information etc., and should be evaluated accordingly.

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last four fiscals, KLMAFL has (on a consolidated basis) posted a total income/net profit of Rs. 126.52 cr. / Rs. 7.06 cr. (FY21), Rs. 185.91 cr. / Rs. 11.38 cr. (FY22), Rs. 278.75 cr. / Rs. 18.33 cr. (FY23), and Rs. 315.92 cr. / Rs. 23.03 cr. (FY24). Thus it has posted growth in its top and bottom lines for the reported periods.

Its current debt-equity ratio of 6.06 will rise to 6.63 post this debt issue. Its net NPA stood at 0.67% as of March 31, 2024, against 2.70% as of March 31, 2022.