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Muthoottu Mini NCD (XV) - August 2021 offer review (May apply)

Muthoottu Mini Financiers Ltd Logo
  • MMFL is a Muthoottu Mini group arm engaged in gold loans and other financial services.
  • This is the 15th offer from this company since February 2014.
  • Last debt offer was in the month of March 2021.
  • The rating agency/debenture trustee are changed by the company.
  • Issue rated as CARE BBB+. Such rating indicates moderate risk in servicing.

ABOUT COMPANY:

Muthoottu Mini Financiers Ltd. (MMFL) a Muthoottu Mini group company is a non-deposit taking systemically important NBFC in the gold loan sector lending money against the pledge of household gold jewellery ('Gold Loans') in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry. It has also forayed into the microfinance loan segment in the financial year 2017 wherein the company provides unsecured loans to joint liability group of women customers (minimum of 5 persons) who require funds to carry out their business activities through a few of its branches in the state of Kerala. Since FY14 this is the 15th debt offer from this company. The last issue was in March 2021. In addition to loan business, the company is also offering depository participant services, money transfer, insurance broking, PAN card related and travel agency services.

As of June 30 2021, MMFL had a network of 807 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Gujarat, Delhi and Goa and the union territory of Puducherry and the company employ 3117 persons in its business operations.

ISSUE DETAILS:

For the purpose of onward lending and for repayment of interest and principal of existing loans (75%) and also for general corporate fund needs (25%), MMFL is coming out with its debt offer of secured/unsecured, redeemable, non-convertible debentures of the face value of Rs.1000 each. The company is issuing NCDs aggregating up to Rs. 125 crores with an option to retain oversubscription up to Rs. 125 crores thus making overall issue sizes of Rs. 250 crores. The issue opens for subscription on August 18, 2021, and will close on or before September 09, 2021. 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. MMFL is spending Rs. 3.50 cr. for mobilizing Rs. 250 cr.

This issue has tenure of 480 days, 24 months, 42 months, 50 months for secured NCDs and 66 months and 84 months for unsecured NCDs. It is offering coupon rates ranging from 8.75% to 10.00%. Interest payments mode is Monthly or Cumulative as per the choice of investors. The issue is to be applied via ASBA mode only and will be allotted in demat mode.

Issue is rated CARE BBB+ by Care Ratings Ltd. It indicates that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. Vivro Financial Services Pvt. Ltd. is the sole lead manager for this offer. Mitcon Trusteeship Services Ltd. is the debenture trustee while Link Intime India Pvt. Ltd. is the registrar to the issue. The company has changed its rating agency and debenture trustee for this offer.

FINANCIAL PERFORMANCE:

For the last four fiscals, MMFL has posted a total income/net profit of Rs. 334.93 cr. / Rs. 14.25 cr. (FY18) and Rs. 298.15 cr. / Rs. 20.96 cr. (FY19), Rs. 313.15 cr. / Rs. 33.54 cr. (FY20) and Rs. 368.25 cr. / Rs. 31.91 cr. (FY21). As of March 31, 2021, its Net NPAs stood at 0.75% against 1.34% for a year-ago period. Though MMFL posted growth in its top line for FY21, its bottom line has declined.

As of March 31, 2021, it's paid-up equity capital of Rs. 249.53 cr. is supported by free reserves of Rs. 263.81 cr. Its current debt-equity ratio of 4.01 will stand enhanced to 4.51 post this issue.


Conclusion / Investment Strategy

This is a frequent debt market visitor company bringing its 15th offer since February 2014 and has changed its Rating Agency, Trustee. Though coupon rates are lucrative, average rating with moderate risk remains a major concern. Risk seeker/cash surplus investors may consider the investment as per their appetite.

Review By Dilip Davda on Aug 17, 2021

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 Muthoottu Mini NCD August 2021 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Muthoottu Mini NCD August 2021 worth investing. The Muthoottu Mini NCD August 2021 Note sets the NCD expectations in systematic way which tells you if Muthoottu Mini NCD August 2021 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoottu Mini NCD August 2021 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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