• This is the 31st debt offer since April 2014 from KFL, a frequent visitor of debt market.
• Its last offer was in the month of April 2024.
• The company has posted growth in its financial performance for the reported periods.
• Instrument rated as IND A-/stable outlook by India Ratings with hiked coupon rates.
• Well-informed Investors looking for steady returns may consider moderate investment.
ABOUT COMPANY:
Kosamattam Finance Ltd. (KFL) is a non-deposit taking NBFC - Middle Layer primarily engaged in the Gold Loan business, lending money against the pledge of household jewellery ("Gold Loans") in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat, Uttar Pradesh and Telangana along with the Union Territory of Puducherry.
The company belongs to the Kosamattam Group led headquartered in Kottayam in the state of Kerala. Gold Loan is the most significant product in the product portfolio of the Company. Its Gold Loan customers are typically businessmen, vendors, traders, farmers, salaried individuals and families, who for reasons of convenience, accessibility or necessity, avail of KFL's credit facilities by pledging their gold jewellery with under various gold loan schemes. These Gold Loan schemes are designed such that higher per gram rates are offered at higher interests and vice versa, subject to applicable laws. This enables its customers to choose the Gold Loan scheme best suited to their requirements. These Gold Loan schemes are revised by the company, from time to time based on the rates of gold, the market conditions and regulatory requirements. Its Gold Loans are sanctioned for a tenure of up to 12 months, with an option to customers to foreclose the Gold Loan.
In addition to the core business of Gold Loan, KFL also offers fee-based ancillary services which include Microfinance, money transfer services, foreign currency exchange, power generation, agriculture, and air ticketing services. Thus it has diverse business activities.
As of June 30, 2024, it had a network of 987 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat, Uttar Pradesh and Telangana along with the Union Territory of Puducherry and employed 3842 persons in its business operations. The company belongs to the Kosamattam Group led by Mathew K. Cherian, headquartered in Kottayam in the state of Kerala.
DEBT OFFER DETAILS:
KFL is coming out with its 31st debt offering of Secured Redeemable Non-maximum up to 25%).
The issue is solely lead managed by SMC Capitals Ltd. while KFin Technologies Pvt. Ltd. is the registrar of the issue. Vistra ITCL (India) Ltd. is the debenture trustee.
These NCD issue have tenures of 18 months, 24 months, 30 months, 36 months, 39 months, 48 months, 60 months, and 84 months. It offers coupon rates from 9.25% to 10.25% based on the selection of investors. The frequency of interest payments will be Monthly or cumulative as per the choice of investors.
CREDIT RATINGS:
This issue is rated as IND A-/Stable by India Ratings I& Research Pvt. Ld., this rating indicates that instruments with this rating are considered to have an adequate degree of safety regarding the timely servicing of financial obligations.
Such instruments carry low credit risk. This rating is not a recommendation to buy, sell or hold securities and investors should take their own decisions. The rating provided by the rating agency 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 DATA:
For the last four fiscals, the company has posted total income/net profits of Rs. 499.33 cr. / Rs. 47.66 cr. (FY20) and Rs. 541.84 cr. / Rs. 65.25 cr. (FY21), Rs. 624.79 cr. / Rs. 80.00 cr. (FY22), and Rs. 782.54 cr. / Rs. 107.05 cr. (FY23), and Rs. 858.94 cr. / Rs. 113.70 cr. (FY24).
As of March 31, 2024, its current paid-up equity capital of Rs. 226.00 cr. is supported by free reserves of Rs. 701.59 cr. Its debt-equity ratio of 5.39 as of March 31, 2024, will rise to 5.61 post this debt issue.
Review By Dilip Davda on July 18, 2024
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
