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Muthoottu Mini Financiers NCD Dec 2015 Review (Avoid)

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Frequent visitor to debt market since FY 2013-14, Muthoottu Mini Financiers Ltd (MMFL) is coming out with its 6th NCD offer to raise Rs. 125 crore with a gree shoe option to retain 100% oversubscription, and thus making the aggregate size of the issue of Rs. 250 crore.

MMFL is RBI registered NBFC primarily engaged in gold loan and also having interest in depository participants services, money transfer services and insurance broking services. Its Gold loan portfolio is on an average 95% and the rest is other activities.

To part finance its loan fund, repayment of interest and principals of existing loans and general corpus fund, the company is issuing secured/unsecured redeemable non-convertible debentures having a face value of Rs. 1000 each. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. Issue has already opened for subscription on 28.12.15 and will close on or before 27.01.16. Issue is solely managed by Vivro Financial Services Pvt Ltd. Link Intime India Pvt Ltd is the registrar to the issue and IL&FS Trust Co. Ltd is the debenture trustee. Post allotment NCDs will be listed on BSE. Although allotment is available in physical and demat mode, trading will take place only in demat mode. These bonds carries coupon rate ranging from 10.25% to 10.50%. Existing debenture holders, ex-servicemen and senior citizens will be given additional 0.25%. Tenure for these NCDs is 500 days, 36months, 50 months and 78 months. Payment of interest will be monthly, annual and cumulative as per the choice of investors.

This issue is graded as IND-BBB by India Rating & Research Pvt Ltd. This 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.

On performance front, for last three fiscals its top line is static around Rs. 350 crore while bottom line has shown declining trends from Rs. 47.32 crore (FY 12-13) to Rs. 18.48 crore (FY 14-15). For past three and half fiscal, its NPA's have been rising and currently stands at 1.43%. Post this issue, its debt equity ratio will rise from 3.55 to 4.10.

Conclusion / Investment Strategy

Considering poor grading and declining trends of bottom line coupled with rising NPAs and debt equity ratio, there is no harm giving this issue a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on November 22, 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.


More Muthoottu Mini Financiers Ltd NCD Views / Analysis / Recommendations ...

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