Muthoottu Mini NCD Dec 21 issue review - (May apply)

•    MMFL is a Muthoottu Mini-group arm engaged in gold loans and other financial services.
•    This is the 16th offer from this company since February 2014.
•    Last debt offer was in the month of August 2021. 
•    This time it has reduced the coupon rates. 
•    Issue rated as CARE BBB+. Such a 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 recently forayed into the microfinance loan segment in the financial year 2017 wherein the company provides unsecured loans to a 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 16th debt offer from this company. The last issue was in August 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 September 30 2021, MMFL had a network of 809 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 employ 3205 persons in our 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, redeemable, non-convertible debentures of the face value of Rs.1000 each. The company is issuing NCDs aggregating up to Rs. 100 crores with an option to retain oversubscription up to Rs. 100 crores thus making overall issue sizes of Rs. 200 crores. The issue opens for subscription on December 01, 2021, and will close on or before December 28, 2021. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples 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. 200 cr. It is spending a higher amount on lower fund mobilization this time. 

This issue has a tenure of 480 days, 24 months, 36 months, 48 months and 66 months. It is offering coupon rates ranging from 8.50% to 9.75%. 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.

The 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. 

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). For the first half of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 23.20 cr. on a total income of Rs. 206.01 cr.

As of September 30, 2021, its Net NPAs stood at 1.04% against 0.75% for FY21 end and 1.34% for FY20 end. ed. As of September 30, 2021, it's paid-up equity capital of Rs. 249.53 cr. is supported by free reserves of Rs. 287.01 cr. Its current debt-equity ratio of 4.34 will stand enhanced to 4.73 post this issue.