Muthoot Mercantile May 26 - Tranche VIII NCD issue review - (Not Rated)

•    This is the 8th debt offer from the company since December 2023.
•    The last debt offer was in December 2025.
•    This issue is rated CRISIL BBB +/ Stable by CRISIL, the company has changed its rating agency for this issue.
•    For this debt offer, the company has hiked the coupon rates.
•    Well-informed investors may park moderate funds for long term.

PREFACE:
The NCD of this company is opening on May 29, 2026, but its offer document dated May 26, 2026 was uploaded on designated exchange i.e., BSE, only early morning today (Thursday – May 29, 2026). This kind of deliberate delay is surprising all as far as compliances are concerned. 

ABOUT COMPANY:
Muthoot Mercantile Ltd. (MML) is a non-deposit taking non-banking financial company- base layer registered with the RBI under section 45-IA of the RBI Act, primarily engaged in the gold loan sector lending money against the pledge of household and/or used gold jewellery (“Gold Loan”) primarily to retail customers who require immediate availability of funds, but who do not have access to formal credit on an immediate basis and are also engaged in providing unsecured loans (“Pronote Loan”) to individual customers for their personal needs. It is also having arrangements with various agencies and brokers for Money Transfer and Insurance Business.

As of March 31, 2026, we disbursed Gold Loan and Pronote Loan to its customers from a network of 325 branches of the Company in 11 states and 1 union territory of India namely Tamil Nadu, Kerala, Delhi, Haryana, Maharashtra, Madhya Pradesh, Odisha, Punjab, Uttar Pradesh, West Bengal, Rajasthan and Gujarat. As of March 31, 2026, it employed 1290 persons in operations. Its branches function as the key point of contact for loan origination, disbursement, and collection processes as well as facilitating customer interaction.

For nine months period ended December 31, 2025, and Fiscal year ended March 31, 2025, Fiscal 2024 and 2023 its interest income from Gold Loan business constituted 97.91%, 95.86 %, 95.25% and 96.58% respectively of its total income. The company also attribute its growth to customer loyalty which in turn leads to repeat business. 

ISSUE DETAILS:
The company is coming out with its 8th debt issue of 1500000 NCD issue with a base size of Rs. 75 cr. and has a green shoe option to retain oversubscription to the tune of Rs. 75 cr., thus the overall size of the debt issue will be Rs. 150 cr. The company is issuing secured, redeemable non-convertible-debentures having a face value of Rs. 1000 each. A minimum application is to be made of 10 NCDs (i.e., Rs. 10000) and in multiple of 1 NCD (i.e., Rs. 1000) thereon, thereafter. The issue opens for subscription on May 29, 2026, and will close on or before June 11, 2026. Post allotment, NCDs will be listed on BSE. MML is spending Rs. 1.21 cr. for this Rs. 150 cr. NCD issue and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing, repayment of existing borrowings, and maximum up to 25% for general corporate purposes. 

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd. and KFin Technologies Ltd. is the registrar of the issue. Mitcon Credentia Trusteeship Services Ltd is the debenture trustee. 

This NCD issue has tenors of 400 days, 24 months, 36 months, and 73 months. It offers a coupon rate ranging from 10.50% to 11.00% with interest payment options of Monthly or Cumulative, as per the series opted by the investors. The allotment will be done on “First come – First Served” basis. The company has allocated 10% for category I, 40% for Category II, and 50% for Category III.

ISSUE RATINGS:
This debt offer is rated CRISIL BBB+/ Stable by CRISIL Ratings Ltd. The rating of NCDs by CRISIL indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. 

This rating is not a recommendation or suggestion, directly or indirectly, to buy, sell, make or hold securities and investors should take their own decisions. The rating provided by 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 PERFORMANCE:
On the financial performance front, for the last four fiscals, MML has posted a total income of Rs. 49.39 cr. / Rs. 14.02 cr. (FY21), Rs. 67.02 cr. / Rs. 17.02 cr. (FY22), and Rs. 94.78 cr. / Rs. 17.70 cr. (FY23), Rs. 131.78 cr. / Rs. 24.28 (FY24), Rs. 166.43 cr. / Rs. 28.09 cr. (FY25). For 9M of FY26 ended on December 31, 2025, it earned a net profit of Rs. 37.32 cr. on a total income of Rs. 172.50 cr. It marked steady growth in its top and bottom lines for the reported periods and improved performance for 9M-FY26.

MML’s net NPA stood at 1.2%% as of December 31, 2025, against 1.3% as of March 31, 2025. Its debt-equity ratio as of December 31, 2025, of 4.81 will stand enhanced to 5.49 post this issue.