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Kosamattam Finance NCD Issue - Jan 2016 (Avoid)

Kosamattam Finance Limited Logo

Kosamattam Finance Ltd (KFL) is a frequent visitor to debt market since 2014-15. KFL is primarily engaged in gold loan finance business and also offers fee based ancillary services which include money transfer services, foreign currency exchange and air ticketing services.

To meet its onward lending and repayment of interest and principal of existing loans along with general corpus funds requirement, the company is offering Secured, Redeemable Non-Convertible Debentures of face value of Rs. 1000 each to mobilize Rs. 100 crore. It has permission to retain 100% oversubscription and thus aggregate size of the offer is Rs. 200 crore. Offer opens for subscription on 18.01.16 and will close on or before 18.02.16. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Post allotment, NCDs will be listed on BSE. Issue is lead managed by Vivro Financial Services Pvt Ltd. Karvy Computershare Pvt Ltd is the registrar and IL & FS Trust Company Ltd is the debenture trustee. NCDs are available in demat as well as physical mode, however, trading will take place only in demat mode. Post this issue, its current debt equity ratio will rise from 8.96% to 10.03%. CARE has given rating of 'CARE BB+' indicating moderate risk of default regarding timely servicing of financial obligations. This is sixth debt offer from this company since FY 15.

These NCDs have tenure of 370 days, 25 months, 36 months, 48 months and 76 months and coupon rates ranging from 9.75% to 11.50% depending upon the choice of investors. Interest payment options are monthly and cumulative.

On performance front, the company that kept posting higher net profits from FY 2010 to 2013 is now having declining trends for past three fiscals. Its net profit of Rs. 392.81 crore for FY 2013 declined to Rs. 264.46 crore for FY 2014 and further to Rs. 52.81 crore for FY 2015 indicating tough time for goal loan sector. For first half of the current fiscal, it has shown some improvement in top and bottom lines, but its equity too has gone up.

Conclusion / Investment Strategy

Considering poor rating, declining trends of net profits for past three fiscals and rising debt-equity ratio, there is no harm in giving this offer a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on December 13, 2019

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.


The Kosamattam Finance NCD Jan 2016 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Kosamattam Finance NCD Jan 2016 worth investing. The Kosamattam Finance NCD Jan 2016 Note sets the NCD expectations in systematic way which tells you if Kosamattam Finance NCD Jan 2016 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Kosamattam Finance NCD Jan 2016 by providing NCD recommendations i.e. subscribe, avoid and neutral.