This is a maiden NCD issue from Home Finance arm of Manappuram group
This issue is rated CARE AA- (Stable by CARE Ratings.
Offers lucrative coupon rates ranging from 9.75% to 10.65%
Considering falling interest rate scenario, this offer with lucrative coupon rates worth considering for long term.
About Company:
Manappuram Home Finance Ltd.(MHFL) is a non-deposit taking Housing Finance Company ('HFC'), registered with the National Housing Bank ('NHB'). It is a wholly owned subsidiary of Manappuram Finance Limited ('MAFIL'), and accordingly are part of Manappuram Group. MHFL is focusing on providing affordable housing finance for the EWS, LIG and MIG segment primarily in Tier II and Tier III cities and towns in India. It offers two products namely Home Loan and Loan Against Property ('LAP').
The company provides secured finance primarily to individual customers with focus on self-employed (professionals & nonprofessionals) and salaried (informal segment) for purchase, self-construction, improvement and extension of homes, new and resalable flats, balance transfer of existing loans, commercial properties (purchase/ LAP) and composite loan (land and construction). Its customer base consists of 6,184 customers (number of customers are considered based on number of loan accounts) and total assets under management ('AUM') was Rs. 518.76 cr. based on IND AS, as on March 31, 2019.
As on August 20, 2019, MHFL has 46 branches located across eight states namely Maharashtra, Gujarat, Tamil Nadu, Kerala, Karnataka, Rajasthan, Madhya Pradesh and Andhra Pradesh. Ticket size of MHFL's various loans ranges between Rs. 0.50 lakh to Rs. 35 lakh.
Issue Details:
To part finance its plans for onward lending, financing and repayment of interest and principal of existing borrowings (75% of the net proceeds) and General corpus fund needs (25% of the proceeds) MHFL is coming out with its maiden debt offer of Secured, Redeemable, Non-Convertible Debentures (Secured NCDs) of Rs. 100 cr. with a green shoe option to retain oversubscription to the tune of Rs. 100 cr. making the overall size of the issue worth Rs. 200 cr. MHFL will spend Rs.4.79 cr. for this entire issue proceeds.
The issue opens for subscription on 30.09.19 and will close on or before 29.10.19. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. Allotment and trading will be done in demat mode only.
The NCD issue is solely lead managed by Vivro Financial Services Pvt. Ltd. while Link Intime India Pvt. Ltd. is the registrar. Catalyst Trusteeship Ltd. is the Debenture Trustee.
Credit Rating for the Issue:
This issue has been rated CARE AA- (Stable) by CARE Ratings. Such rating indicates that instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
| Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 | Series 7 | |
|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Annually | Cumulative | Monthly | Annually | Cumulative | Cumulative |
| Tenor | 36 months | 36 months | 36 months | 60 months | 60 months | 60 months | 2500 Days |
| Face Value/ Issue Price(Rs /NCD) | Rs 1000 | ||||||
| Mode of Interest Paymeny | Through various mode available | ||||||
| Coupon Rate | 9.75% | 10.00% | NA | 10.25% | 10.65% | NA | NA |
| Effective Yield(%)(per annum) | 10.20% | 10.00% | 10.00% | 10.75% | 10.65% | 10.65% | 10.65% |
| Amount on Maturity | Rs 1,000 | Rs 1,000 | Rs 1,331 | Rs 1,000 | Rs 1,000 | Rs 1,659 | Rs 2,000 |
This issue has tenures of 36 months, 60 months and 2500 days and interest payment options are Monthly, Annually or Cumulative as per the choice of investors on the basis of series applied for. It offers coupon rates ranging from 9.75% to 10.65%.
Financial Performance:
On the financial performance front, for the last two fiscals, MHFL has posted total income/net profit of Rs. 51.51 cr. / Rs. - (4.45) cr. (FY18) and Rs. 66.28 cr. / Rs. 3.02 cr. (FY19). Thus it has just turned the corner for FY19.
MHFL's current debt equity ratio of 1.82 will stand enhanced to 2.88. Its gross non-performing assets and net non-performing assets as a percentage of AUM as at March 31, 2019 based on IND AS stood at 3.85% and 3.05% respectively.
Review By Dilip Davda on September 28, 2019
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.
