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KLM Axiva NCD July 21 issue review (May apply)

KLM Axiva Finvest Limited Logo
  • This is the fourth debt offer from KLMAFL since September 2018.
  • Its recent financial performance is listless.
  • CARE has given BB+/Stable rating to this debt offer, which is poor.

ABOUT COMPANY:

KLM Axiva Finvest Ltd. (KLMAFL) 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 May 31, 2021, it operated through 266 branches across four states namely Kerala, Karnataka, Tamil Nadu and Telangana managed through its corporate office located at Kochi. As of March 31, 2021, March 31, 2020 and March 31, 2019, KLMAFL's AUM was Rs. 747.30 cr., Rs. 513.54 cr. and Rs. 373.83 cr. respectively. Its AUM increased at a CAGR of 41.39% for the said periods.

The company also has a wholly owned subsidiary, namely KMLM Financial Services Limited.

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

ISSUE DETAILS:

The company is coming out with its fourth debt offer after 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. 50 cr. thus making a total issue size of Rs. 150 cr. The issue opens for subscription on July 05, 2021 and will close on or before July 26, 2021. 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, this NCDs will be listed on BSE. The company will be spending Rs. 0.81 cr. for this entire issue process.

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

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 10.50% to 11.50%. It has tenure ranging from 365 days, 400 days, 18 months, 2 yrs., 3 yrs., 5 yrs. and 79 months. It offers Monthly, Annually and Cumulative interest payment mods based on series and the tenure.

This debt offer 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 moderate risk of default regarding timely servicing of financial obligations.

FINANCIAL PERFORMANCE:

On the financial performance front, for the last two fiscals, KLMAFL has (on a consolidated basis) posted 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 current debt equity ratio of 8.60 will rise to 10.38 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 on the said date its paid up equity capital of Rs. 67.93 cr. was supported by free reserves of Rs. 28.67 cr.


Conclusion / Investment Strategy

Considering listless financial data, poor rating, cash surplus, risk savvy investors may consider parking of their fund at their own risk.

Review By Dilip Davda on Jul 4, 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 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 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 worth investing. The KLM Axiva Finvest NCD Note sets the NCD expectations in systematic way which tells you if KLM Axiva Finvest NCD good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in KLM Axiva Finvest NCD by providing NCD recommendations i.e. subscribe, avoid and neutral.