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 recently forayed into microfinance loan segment in 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 few of its branches in the state of Kerala. Since FY14 this is the 13th debt offer from this company. This issue is coming within 45 days of previous offer that closed on November 18, 2020.
As on September 30,, 2020, MMFL had a network of 792 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry and employed 3162 persons in business operations.
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 face value of Rs.1000 each. The company is issuing NCDs aggregating up to Rs. 125 crore with an option to retain oversubscription up to Rs. 125 crore thus making overall issue sizes of Rs. 250 crore. Issue opens for subscription on January 13, 2021, and will close on or before February 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. MMFL is spending Rs. 3.50 cr. for mobilizing Rs. 200 cr.
This issue has tenure of 480 days, 24 months, 42 months, 66 months for secured NCDs and 61 months and 84 months for unsecured NCDs. It is offering coupon rates ranging from 9.25% to 10.25%. Interest payments mode is Monthly or Cumulative as per the choice of investors. Issue is to be applied via ASBA mode only and will be allotted in demat mode only.
Issue is rated IND BBB/Stable by India Ratings Ltd. It indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk. Vivro Financial Services Pvt. Ltd. is the sole lead manager for this offer. Vistra ITCL (India) Ltd. is the debenture trustee while Link Intime India Pvt. Ltd. is the registrar to the issue. Post allotment, NCDs will be listed on BSE.
| Tenure | 480 Days | 24 months | 24 months | 42 months | 66 months | 61 months | 84 months |
|---|---|---|---|---|---|---|---|
| Nature | Secured | Unsecured | |||||
| Options | I | II | III | IV | V | VI | VII |
| Frequency of Interest Payment | Monthly | Monthly | Cumulative | Monthly | Cumulative | Monthly | Cumulative |
| Minimum Application | 10 NCDs (Rs 10,000) (across all options of NCDs) | ||||||
| In multiples, of | 1 NCD after the minimum application | ||||||
| Face Value of NCDs (Rs /NCD) | Rs 1,000 | ||||||
| Issue Price (Rs /NCD) | Rs 1,000 | ||||||
| Mode of Interest Payment/ Redemption | Through various options available | ||||||
| Coupon (%) per annum in Category I, II and III | 9.25% | 9.50% | NA | 10.00% | NA | 10.25% | NA |
| Redemption Amount (Rs /NCD) for NCD Holders in Category I, II and III | 1,000 | 1,000 | 1,200 | 1,000 | 1,750 | 1,000 | 2,000 |
| Effective Yield (%) (per annum) | 9.65% | 9.92% | 9.54% | 10.47% | 10.71% | 10.75% | 10.41% |
| Put and Call Option | Not Applicable | ||||||
| Coupon Type | Fixed | ||||||
For the last three fiscals, MMFL has posted total income/net profit of Rs. 334.93 cr. / Rs. 14.25 cr. (FY18) and Rs. 298.15 cr. / Rs. 20.96 cr. (FY19) and Rs. 313.15 cr. / Rs. 33.54 cr. (FY20). For H1 of FY21 it has earned net profit of Rs. 19.46 cr. on total income of Rs. 171.01 cr.
As on September 30, 2020 its net NPA stood at 0.59%. As on September 30, 2020 it's paid up equity capital of Rs. 249.53 cr. is supported by free reserves of Rs. 241.46 cr.
Its current debt equity ratio of 3.74 (As on September 30, 2020) will stand enhanced to 4.25 post this issue.
Review By Dilip Davda on January 12, 2021
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
