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KLM Axiva NCD offer review (May apply)

KLM Axiva Finvest Limited Logo

•    Maiden debt offer from this NBFC
•    CARE has assigned CARE/BB (Stable) rating to this offer
•    It offers attractive coupon rates
•    Risk savvy investors may consider on their own risk.

ABOUT COMPANY:
KLM Axiva Finvest Ltd. (KLM) is a non-deposit taking and non- 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. The company had originally obtained a Certificate of Registration in the name of Needs Finvest Limited dated December 13, 1997 and subsequently, its name was changed to KLM Axiva Finvest Limited. It operates primarily in three business verticals: (i) gold loan business, lending money against the pledge of household jewellery, (ii) micro, small and medium enterprises loan, and (iii) personal loan. Further, as a part of offerings, it also provides microfinance loan to women customers and vehicle loan. As on August 31, 2018, the company  operates through 79 branches across three states namely Kerala, Karnataka and Tamil Nadu managed by corporate office located at Kochi.

ISSUE DETAILS/CAPITAL HISTORY:
To finance its onward lending, financing, repayment of interest and principal of existing loans and general corpus fund needs, KLM is coming out with its maiden debt offer of Rs. 100 cr. via secured, redeemable non convertible debentures having a face value of Rs. 1000 per NCD. Minimum application is to be made for 5 NCDs (i.e. Rs. 5000) and in multiple of 1 NCD (Rs. 1000) thereon, thereafter. These instruments have tenure of 1 yr, 2 yrs., 3 yrs. , 5 yrs., and 6 yrs. It offers coupon rates ranging from 11.25% to 12.25% and the interest payment mode available for Monthly, Annually or Cumulative, as per the choice of investors.

NCD issue opens for subscription on 27.09.18 and will close on or before 26.10.18. Post allotment, listing will be done only on BSE. Issue is solely lead managed by Vivro Financial Services Pvt. Ltd. while Karvy Computershare Pvt. Ltd. is the registrar to the issue. Vistra ITCL (India) Pvt. Ltd. is the Debenture Trustee for the issue.

As on 31.03.18, its paid up capital of Rs. 39.99 cr. is supported by free reserves of Rs. 9.48 cr. Its entire equity is issued at a nominal premium ranging from Rs.1.25 and Rs. 1.50 per share.

RATING OF INSTRUMENTS:
These instruments are rated as CARE/BB (Stable) by CARE. The rating of NCDs by CARE indicates that instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.

FINANCIAL PERFORMANCE:
On financial performance front, for last three fiscals, KLM has posted total income/net profits of Rs. 10.82 cr. / Rs. 1.64 cr. (FY16), Rs. 23.94 cr. / Rs. 2.13 cr. (FY17) and Rs. 42.73 cr. / Rs. 5.69cr. (FY18). Its debt-equity ratio will stand enhanced from 3.38 at present to 5.41 post issue.  As of March 31, 2017 and March 31, 2018, KLM’s AUM was Rs. 913.57 cr. and Rs. 1942.33 cr. respectively. Its AUM increased at a CAGR of 189.78% from Rs. 27.57 cr. as of March 31, 2014 to Rs. 1942.33 cr. as on 31.03.18. As on 31.03.18, its gross and net NPAs stood at 4.40% and 3.94% respectively. These were a bit higher compared to 4.23% and 3.78% respectively for FY17.  

MERCHANT BANKER’S TRACK RECORD:
This merchant banker is not very active and keeps bringing rarely some IPO and debt offers.


Conclusion / Investment Strategy

 Although coupon rates are very attractive, considering poor rating and the average financial performance, risk savvy cash surplus investors may consider parking of funds at their own risk.

Review By Dilip Davda on Sep 26, 2018

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 KLM Axiva Finvest NCD SEP 2018 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 SEP 2018 worth investing. The KLM Axiva Finvest NCD SEP 2018 Note sets the NCD expectations in systematic way which tells you if KLM Axiva Finvest NCD SEP 2018 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in KLM Axiva Finvest NCD SEP 2018 by providing NCD recommendations i.e. subscribe, avoid and neutral.