Free Trading + Demat Account

Muthoottu Mini Fin NCD offer review (Avoid)

  • MMFL is a Muthoottu Mini group ark engaged in gold loan and other financial services.
  • This is the 7th offer from this company since FY14.
  • Issue rated as CARE BBB-/Stable. Such rating indicates moderate risk in servicing.
  • Financial performance is showing declined top line but growing bottom line, which a bit surprising.

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 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 7th debt offer from this company.

As of March 31, 2019, 62.74% of its borrowings were at fixed rates of interest. As of March 31, 2019, 98.43% of MMFL's branches i.e. 755 branches were located in the southern states of Andhra Pradesh, Telangana, Goa, Karnataka, Kerala and Tamil Nadu and the union territory of Puducherry and these constituted about 96.41% of its total gold loan portfolio as of March 31, 2019.

As on June 30, 2019, the company has been sanctioned working capital limits of ₹75 cr. from Andhra Bank, ₹24 cr. from Dhanalaxmi Bank Limited, ₹50 cr. from IndusInd Bank Limited ₹50 cr. from Oriental Bank of Commerce, ₹165 cr. from the South Indian Bank Limited, ₹50 cr. from State Bank of India and ₹25 cr. from Union Bank of India.

Financial Performance:

For the last three fiscals, MMFL has posted total income/net profit (Loss) of ₹435.46 cr. / ₹- (81.09) cr. (FY17), ₹334.93 cr. / ₹14.25 cr. (FY18) and ₹298.15 cr. / ₹20.96 cr. For these periods its net NPAs were 1.97%, 1.58% and 1.39% respectively. While top line has shown declining trends, its bottom line has shown improvements over the years, which is a bit surprising. As on 31.03.19 it's paid up equity capital of ₹249.53 is supported by free reserves of ₹197.75 cr.

Its current debt equity ratio of 2.48 (31.03.19) will stand enhanced to 2.82 post this issue.

Issue Details:

For the purpose of onward lending and for repayment of interest and principal of existing loans and also for general corporate fund needs, , MMFL is coming out with its debt offer of secured, redeemable, non-convertible debentures of face value of Rs.1000 each. The company is issuing NCDs aggregating up to ₹100 crore with an option to retain oversubscription up to ₹50 crore thus making overall issue sizes of ₹150 crore. Issue opens for subscription on 07.08.19 and will close on or before 05.09.19. Minimum application is to be made for 10 NCDs (i.e. ₹10000) and in multiple of 1 NCD (i.e. Rs 1000) thereon, thereafter.

The specific terms of the Secured NCDs are mentioned below

Terms and conditions in connection with Secured NCDs****Series

I

II

III

IV

V

VI

VII

VIII

Frequency of Interest Payment

Cumulative

Monthly

Monthly

Annual

Cumulative

Monthly

Monthly

Cumulative

Minimum Application

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

₹10,000 (10 NCDs)

In multiples of thereafter

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

₹1,000 (1 NCD)

Face Value of Secured NCDs (₹/ NCD)

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

Issue Price (₹/ NCD)

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

₹1,000

Tenor from Deemed Date of Allotment

480 days

24 months

24 months

36 months

36 months

36 months

60 months

60 months

Coupon Rate (% per annum)

NA

10.00%

10.25%

10.50%

N.A.

10.35%

10.65%

N.A.

Effective Yield (Per annum)

9.89%

10.47%

10.75%

10.50%

10.25%

10.86%

10.65%

10.35%

Mode of Interest Payment

Through various options available

Redemption Amount (₹/ NCD****

₹1,132

₹1,000

₹1,000

₹1,000

₹1,340

₹1,000

₹1,000/-

₹1,636/-

Maturity Date (From Deemed Date of Allotment)

38 months

38 months

60 months

60 months

84 months

60 months

60 months

84 months

Nature of indebtedness

Secured rated listed non-convertible debentures

Put and call option

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

N.A.

Deemed Date of Allotment

The date on which the Board or the Debenture Committee approves the Allotment of NCDs. All benefits relating to the NCDs including interest on the NCDs shall be available to the Investors from the Deemed Date of Allotment. The actual Allotment of NCDs may take place on a date other than the Deemed Date of Allotment

This issue has tenure of 480 days, 24 months, 36 months and 60 months. It is offering coupon rates ranging from 10.00% to 10.65%. For 480 days cumulative scheme it offers yield of 9.89%. Interest payments mode is Monthly, Annually 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 CARE BBB-/Stable by India Ratings and Research Pvt. 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.


Conclusion / Investment Strategy

Considering poor rating and erratic performance for past four fiscals, there is no ham in giving this debt offer a miss. (AVOID).

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Aug 6, 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 Muthoottu Mini NCD July 2019 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 July 2019 worth investing. The Muthoottu Mini NCD July 2019 Note sets the NCD expectations in systematic way which tells you if Muthoottu Mini NCD July 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Muthoottu Mini NCD July 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.


Comments

No comments found. Be the first to post a comment.




Message Board

Stock Message Board



Search Chittorgarh.com:

Chittorgarh.com Mobile Apps:

Download Android App Downlaod iOS App