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KLM Axiva Sept/Oct - 2022 NCD Issue review (Avoid)

KLM Axiva Finvest Limited Logo

•    This is the 7th debt offer from KLMAFL since September 2018. 
•    Last debt offer was in Feb-March 2022. 
•    It has posted growth in its earnings in recent years.
•    India Ratings has given a BBB -/Stable rating to this debt offering which is poor.
•    There is no harm in skipping this poorly rated debt offer.

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, 2022, we operate through 502 branches across five states namely Kerala, Karnataka, Tamil Nadu, Telangana, and Andhra Pradesh managed through our corporate office located at Kochi.

It operates primarily in four business verticals: (i) gold loan business, lending money against the pledge of household jewellery, (ii) micro, small and medium enterprises loan, (iii) personal loan, and (iv) microfinance loan to women customers.

As of June 30, 2022, it had 1781 full-time employees. In addition, the company had temporary sales, marketing, and recovery personnel who work on a commission basis. KLMAFL adheres 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. 

The company is coming out with its seventh 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 September 15, 2022, and will close on or before October 12, 2022. Minimum application is to be made for 5 NCDs (i.e. Rs. 5000.00) and in multiple 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. 1.53 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 a maximum of 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 8.75% to 10.75%. It has tenure ranging from 400 days, 16 months, 18 months, 2 yrs., 3 yrs., 5 yrs., and 82 months. It offers Monthly, Annually, and Cumulative interest payment mods based on series and tenure. 

This time the company has changed its rating agency. The debt offering is rated IND BBB - (BBB Minus) 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. 

On the financial performance front, for the last three fiscals, KLMAFL has (on a consolidated basis) posted a total income/net profit of Rs. 102.25 cr. / Rs. 0.51 cr. (FY20) and Rs. 126.52 cr. / Rs. 7.06 cr. (FY21), and Rs. 185.91 cr. / Rs. 11.38 cr. (FY22). For Q1 of FY23, it earned a net profit of Rs. 3.51 cr. on a total income of Rs. 66.77 cr.  

Its current debt-equity ratio of 8.10 will rise to 9.34 post this debt issue. Its net NPA stood at 1.59% as of June 30, 2022, against 2.70% as of March 31, 2022. Pages of financial data in the offer documents are attached in the form of scanned copies that are blurred and not readable properly. 

Conclusion / Investment Strategy

The frequent debt market visitor company from the south - KLM Axiva is coming out with its 7th debt offer with reduced coupon rates. Its rating is BBB-/Stable by India Rating. Such ratings are not fancied by the investors in the debt market. Hence there is no harm in skipping this issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on September 14, 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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

The KLM Axiva Finvest NCD September 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 September 2022 worth investing. The KLM Axiva Finvest NCD September 2022 Note sets the NCD expectations in systematic way which tells you if KLM Axiva Finvest NCD September 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in KLM Axiva Finvest NCD September 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.