Muthoot Finance NCD offer review - April 2018 (Subscribe for Long Term)

Muthoot Finance Ltd. (MFL) a flagship NBFC (Non Banking Finance Company) of the Muthoot Group is primarily in the business of providing finance against gold jewellery and has diversified into affordable housing finance as well as micro finance business. The non-gold loan portfolio remains in the range of 15 to 20% of the overall portfolio of the company. MFL is also in the hospitality, healthcare, media, education, information technology, foreign exchange, insurance distribution, and money transfer businesses. The company had a nationwide network of 4287 branches as on September 30, 2017. It had an advances book of Rs.27608 crore, and a net worth of Rs.7324 crore as on September 30, 2017.

It is a frequent visitor for debt market fundraising process. Now it plans to mobilize Rs. 500 crore through tranche I of secured redeemable non-convertible debentures of face value of Rs. 1000 each with a self-limit of Rs. 3000 crore.  Object of the issue is utilizing 75% for the purpose of lending and the balance for general corpus funds. Issue opens for subscription on 09.04.18 and will close on or before 08.05.18. 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. Allotment will be compulsory in demat mode. Tenure for this offer is 400 days, 24 months, 38 months and  60 months  and coupon rates is ranging from 8.25% to 98% and the payment mode of monthly, yearly and cumulative as per the choice of investors. Issue is jointly lead managed by Edelweiss Financial Services Ltd. and A K Capital Services Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue and IDBI Trusteeship Services Ltd. is the Debenture Trustee.  Post allotment, NCDs will be listed on BSE. Proposed issue in Tranche I is rated as ICRA AA Stable and CRISIL AA stable by the respective rating agencies. This rating indicates high degree of safety regarding timely servicing of financial obligations.

On the performance front, for fiscal 2017, MFL's standalone profit after tax (PAT) and total income grew to Rs.1180 crore and Rs.5658 crore, from Rs.810 crore and Rs.4875 crore, respectively in the previous fiscal. Standalone PAT for the first half of fiscal 2018 increased to Rs.805 crore from Rs.567 crore during the first half of previous fiscal. On a consolidated basis, PAT (before adjustment for minority interest) was Rs.1207 crore on total income ofRs.5938 crore, against a PAT (before adjustment for minority interest) of Rs.818 crore on total income of Rs.4941 crore for the said periods respectively. Post entire issue of Rs. 3000 crore, its current debt equity ratio of 3.24 will stand enhanced to 3.70. Gross non-performing assets ("NPAs") were at 1.99%, 1.90% 2.19% , 2.88% and 2.06% of MFL's gross loan portfolio under management as of March 31, 2013 2014, 2015, 2016 and 2017 respectively.


Conclusion / Investment Strategy

Considering AA Stable ratings by ICRA and CRISIL and the standing of the group in the segment, investors may consider long term investment. (Subscribe)

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Nov 22, 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.

Email: dilip_davda@rediffmail.com

The Muthoot Finance NCD April 2018 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Muthoot Finance NCD April 2018 worth investing. The Muthoot Finance NCD April 2018 Note sets the NCD expectations in systematic way which tells you if Muthoot Finance NCD April 2018 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoot Finance NCD April 2018 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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