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Muthoot Fincorp NCD Offer - Sep 2015 (Apply)

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Muthoot Fincorp Limited (MFL) (erstwhile known as Muthoot Debt Management Services Ltd.) is a part of 'Muthoot Pappachan group'. The company is RBI registered NBFC engaged primarily in providing personal and business loans secured by Gold jewellery/ornaments. As on 31.03.15 it had approximately 22 lakh loan accounts that were services through 3699 branches located across 16 states. It also offers foreign exchange conversion and money transfer services as sub-agents. MFL is also engaged in sale of wind energy through its wind farms and provides micro credit facility to women entrepreneurs.

MFL is once again coming out with its 3rd (in last two years) Secured Redeemable Non-Convertible debenture issue having face value of Rs. 1000 each. The aggregate size of the issue is Rs. 300 crore (including green shoe option to retain Rs. 150 crore oversubscription). Issue opens for subscription on 28.09.15 and will close on 27.10.15 or before. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD thereon, thereafter. This issue has been rates as 'CRISIL A/Stable' by CRISIL indicating adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. SMC Capitals Ltd is the lead manager to this issue and Integrated Enterprises (India) Ltd is the registrar. SB Cap Trustee Company Ltd is the debenture trustee. Post allotment NCDs will be listed on BSE. 75% of the issue proceeds will be use for lending purpose and the rest for general corpus fund requirements. These NCDs have tenure ranging from 400 days to 60 months having interest payment options on Monthly, Annual or Cumulative basis as per the choice of investors. It carries coupon rates ranging from 9.50% to 10.75% depending on the tenure and interest payment option selection.

On the performance front, the company has shown inconsistent performances for last five years. It suffered a severe setback in FY 2014 with lower top line and lowest net profit of last five years. For FY 15 it has posted total income of Rs. 2082.37 crore with a net profit of Rs. 792.67 crore with an EPS of Rs. 4.25. As Gold values have continued to slide in last two years it is raising concern. However, proposed Gold Monetization scheme may bring some relief for such companies, as opined by analysts.

Conclusion / Investment Strategy

As market has general expectations of rate cuts in near term, this offer may be considered for moderate investment as per individual choice.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on December 13, 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.


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