Muthoot Finance NCD Offer - Nov 2013 (Avoid)

This NBFC having a major role in gold financing is a frequent visitor to capital market with debt offers. Having floated offer for Rs. 500 crore in September 2012 ( got around Rs. 287 crore) and for Rs. 300 crore in September 2013 ( got around Rs. 325 crore) it has again planned NCD offer for Rs. 300 crore that opened for subscription on 18.11.13 and will close on 02.12.13.

The issue is rated AA-/Negative by ICRA and CRISIL and thus it is a lower-rated debt offer. The issue is lead managed by ICICI Securities Ltd and registrar to the issue is Link Intime India Pct. Ltd. Each bond is having a face value of Rs. 1000 and varied coupon rate based on tenure (24 months to 60 months) and interest receiving option has interest rates ranging from 10.75% to 12.25% on different categories. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000). It will be listed on BSE post allotment.

Looking at the last five fiscal's financials, the trend of top and bottom line indicated doubling pattern for fiscal 2010, 2011 and 2012 with commensurate rise in profits, but for 2013 it top and bottom line has shown growth of just around 20%. Its NPA are also growing year-on-year from 0.48% (2010) to 2.08% in Q1 of current fiscal. Though it is around 2% of the total lending, it is really alarming.


Conclusion / Investment Strategy

The company is the leader in gold financing sector and has pan India presence, but looking at the current trends for the industry, this offer is not worth considering at lucrative rates that are being offered.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 12, 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 Nov 2013 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 Nov 2013 worth investing. The Muthoot Finance NCD Nov 2013 Note sets the NCD expectations in systematic way which tells you if Muthoot Finance NCD Nov 2013 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoot Finance NCD Nov 2013 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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