About Company:
Muthoot Finance Ltd.(MFL) is the largest gold loan NBFC in India in terms of loan portfolio. MFL provides personal loans and business loans secured by gold jewelry, or Gold Loans, primarily to individuals who possess gold jewelry but are not able to access formal credit within a reasonable time, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements. Its Gold Loan portfolio as of Sept 30, 2019 comprised approximately 8.1 million loan accounts in India that are serviced through 4,540 branches across 23 states, the national capital territory of Delhi and five union territories in India. As of Sept 30, 2019 it employed 25091 persons in its operations. As on said date it 222 ATMs spread across 17 states.
Issue Details:
This company is a frequent visitor for the debt market and has brought 19 offers so far since August 2011. Thus this is the 20th offer from its stable.
To part finance its plans for onward lending (75% of the net proceeds) and General corpus fund needs (25% of the proceeds) MFL is coming out with Tranche III 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. 690 cr. making the overall size of the issue worth Rs. 790 cr. MFL has a shelf limit of Rs. 4000 cr. for this issue. The issue opens for subscription on 29.11.19 and will close on or before 24.12.19. 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. MFL will spend Rs. 8 crore for this issue proceeds.
The NCD 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 while IDBI Trusteeship Ltd. is the Debenture Trustee.
This issue has been rated ICRA AA (Stable) by ICRA and CRISIL AA/Stable by CRISIL. The rating of the NCDs by ICRA and CRISIL indicates high degree of safety regarding timely servicing of financial obligations.
| Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 | Series 7 | Series 8 | Series 9 | Series 10 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Monthly | Monthly | Annually | Annually | Annually | NA | NA | NA | NA |
| Tenor | 24 Months | 38 Months | 60 Months | 24 Months | 38 Months | 60 Months | 24 Months | 38 Months | 60 Months | 90 Months |
| Coupon Rate (Retail) | 9.25% | 9.50% | 9.75% | 9.50% | 9.75% | 10.00% | NA | NA | NA | NA |
| Effective Yield (per annum) | 9.25% | 9.50% | 9.75% | 9.50% | 9.75% | 10.00% | 9.25% | 9.50% | 9.75% | 9.67% |
| Amount on Maturity | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,193.56 | Rs 1,333.72 | Rs 1,592.29 | Rs 2,000 |
| Mode of Payment | Through Various Options Available | |||||||||
This issue has tenures of 24 months 38 months, 60 months and 90 months 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 9.25% to 10% (same as last debt offer).
Financial Performance:
On the financial performance front, for the last two fiscals, on a consolidated basis, MFL has posted total income/net profit of Rs. 6781.69 cr. / Rs. 1843.75 cr. (FY18) and Rs. 7601.05 cr. / Rs. 2102.96 cr. (FY19). For H1 of FY20 it has earned net profit of Rs. 1471.86 cr. on a total income of Rs. 4478.50 cr. Post this issue, MFL's current debt equity ratio of 2.97 will stand enhanced to 3.04. As on 31.03.19 it's gross / net NPAs were 2.72%/ 2.39% against 4.42%/3.84% for a year ago period.
Review By Dilip Davda on November 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.
