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• This is the maiden debt offer from the company.
• The aggregate size of the issue is Rs. 200 cr. including green shoe option of Rs. 100 cr.
• This issue is rated IND BBB / Stable by India Rating.
• Considering poor rating, there is no harm in skipping this lucrative offer.
ABOUT COMPANY:
Muthoot Mercantile Ltd. (MML) is a non-deposit taking non-banking financial company- base layer (NBFC - Base Layer) registered with the RBI bearing registration no. N-16-00178 dated December 12, 2002 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.
As of August 31, 2023, it disbursed Gold Loan and Pronote Loan to customers from a network of 224 branches of the Company in 8 states and union territory of India namely Tamil Nadu, Kerala, Haryana, Maharashtra, Madhya Pradesh, Odisha, Punjab, Uttar Pradesh and Delhi. As of the said date, it employed 722 persons in its operations. MML's branches function as the key point of contact for loan origination, disbursement, and collection processes as well as facilitating customer interaction.
Its Gold Loan portfolio as of August 31, 2023 comprised approximately 0.72 lakhs customers aggregating a principal amount of Rs. 549.63 cr. in Gold Loan, which accounted for 96.48% of total loans. Its Gold Loan portfolio as of August 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 had outstanding principal amounting to Rs. 549.63 cr., Rs. 494.70 cr., Rs. 332.56 cr., and Rs. 284.69 cr. respectively and has grown at a CAGR of 31.29% from Fiscal 2021 to August 31, 2023.
ISSUE DETAILS:
The company is coming out with its maiden debt issue to mobilize Rs. 200 cr. as an aggregate amount. It has planned a secured NCD issue with a base size of Rs. 100 cr. and has a green shoe option to retain oversubscription to the tune of Rs. 100 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 December 04, 2023, and will close on or before December 15, 2023. Post allotment, NCDs will be listed on BSE. MML is spending Rs. 1.78 cr. for this Rs. 200 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 Credential Trusteeship Services Ltd is the debenture trustee.
This NCD issue has tenors of 367 days, 18 months, 24 months, 36 months, 60 months and 75 months. It offers a coupon rate ranging from 9.50% to 10.50% with interest payment options of Monthly or Cumulative, as per the series opted by the investors. The allotment will be in demat mode only. Put and Call option is not applicable for this issue. It offers additional incentive of 0.50% to Senior Citizens.
ISSUE RATINGS:
This debt offer is rated IND BBB/ Stable by India Ratings and Research Pvt. Ltd. The rating of NCDs by India Ratings 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.
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. 94.67 cr. / Rs. 18.19 cr. (FY23). For 5M of FY24 ended on August 31, 2023, it earned a net profit of Rs. 8.94 cr. on a total income of Rs. 46.45 cr. Thus it posted steady growth in its top and bottom lines for the reported periods.
MML's net NPA for the above period stood at 0.16% (FY21), 0.33% (FY22), 0.11% (FY23), and 0.99% (5M FY24). Its debt-equity ratio as of August 31, 2023, at 3.13 will stand at 4.51 post this issue. As of the said date, its paid up equity capital of Rs. 29.42 cr. is supported by free reserves of Rs. 115.08 cr.
Review By Dilip Davda on November 29, 2023
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 before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Muthoot Mercantile NCD Nov 2023 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 Mercantile NCD Nov 2023 worth investing. The Muthoot Mercantile NCD Nov 2023 Note sets the NCD expectations in systematic way which tells you if Muthoot Mercantile NCD Nov 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoot Mercantile NCD Nov 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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1. 100 Year Old Company. Muthoot Ninan Group started by Mr. Mathai Ninan, father of Muthoot Mercantile Chairman Mr. Mathew Ninan, from where other Muthoots have branched out.
2. One of the FASTEST growing Gold Loan only NBFCs in India – 100% growth in last 3 years period.
3. PAN India presence in 11 states
4. Continuously profit making. Never made any loss in any financial year from inception
5. One of the HIGHEST CAR (Capital Adequacy Ratio) NBFCs – currently CAR is at 40%
6. Least NPA (Non-Performing Asset) at 0.27% as on March-23