12.25% Muthoottu Mini Financiers NCD-July/Aug-2015
After 10 months, Muthootu Mini Financiers Limited is again offering NCD’s, where interest rates are up to 11.75% and yield works out to be 12.25% for 72 months tenure NCD. Muthootu Mini Financiers is a Non Banking Finance Company operating from Kerala and has a presence in South India. How is current Muthootu Mini Financiers NCD of July/August-2015 looking like? What are the positive features of this NCD? Are there any risks involved in Muthootu Mini Financiers NCD July, 2015? Among SREI Infra Finance NCD (which his open for subscription now) and Muthoottu Mini Financiers which is better?
About Muthoottu Mini Financiers Limited
This company is a non deposit taking systemically important NBFC in the Gold Loan sector lending money against the pledge of used household gold Jewellery (‘Gold Loans’) in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Goa, Haryana, Uttar Pradesh and Maharashtra. They also provide short-term personal loans primarily to individual customers who require immediate availability of funds. Their Gold Loan portfolio as of March 31, 2013, March 31, 2014 and March 31, 2015 comprised of 3,74,830, 2,75,895 and 374,830 gold loan accounts respectively, aggregating 1,81,589.13 lacs and 1,76,881.16 lacs which is 98.87% and 94.80% of our total loans and advances as on March 31, 2013 and March 31, 2014. They have a network of 1,053 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Goa, Haryana, Uttar Pradesh and Maharashtra.
Features of Muthoottu Mini Financiers NCD of July/August-2015
- Start date: 16-Jul-2015
- End date: 14-Aug-2015
- NCD’s are available for 500 days, 36 months, 45 months and 72 months tenure.
- It offers monthly and cumulative options.
- These NCD’s are secured NCD’s.
- Bond face value is Rs 1,000.
- Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
- These NCD bonds would be listed on BSE. Hence, these are liquid investments (provided the buyer is available on that date when you sell such NCD’s).
- NCD’s can be invested through Demat account or Physical form.
- Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
- The issue size is Rs 125 Crores with an option to retain another 125 Crores aggregating to Rs 250 Crores.
Below is the Interest rate chart
How the company is doing in terms of Financials?
a) Below are the details profit after tax
- Year ended Mar-2010 – Rs 408 Lakhs
- Year ended Mar-2011 – Rs 389 Lakhs
- Year ended Mar-2012 – Rs 2130 Lakhs
- Year ended Mar-2013 – Rs 4731 Lakhs
- Year ended Mar-2014 – Rs 3366 Lakhs
- Mar-2015 nos not available
b) Non Performing Assets (NPA) of the company are 0.33% for FY2012-13 Vs 0.71% in FY2013-14. FY 2014-15 nos not available.
Why to invest in Muthoottu Mini Financiers NCD of July, 2015
- The company is earning good profits in the last 5 years, hence less risk for payment of interest on these NCD’s. However, one should note that FY2013-14 profits was reduced compared to previous years.
- It offers secure NCD’s which are secured by movable assets, including book debts, receivables, etc. Means in case of any unforeseen thing happening to company, investors of NCD would get preference in re-payment of the principal. However, there could be delays. Hence it is relatively safe to invest in such secured NCD’s.
- Attractive interest rates of 12.75%. You can double your money in 72 months. Senior Citizens & existing NCD holders would get additional 0.25% more. However, they need complete KYC norms to get additional interest.
- CARE rated these NCD’s as CARE BBB- (Triple B minus). One should note that Sep/Oct NCD’s were rated by India Ratings as IND-RA BB+ (Double B plus). Hence there is reduction in credit rating now.
Why not to invest in Muthoottu Mini Financiers NCD of July-2015?
- This Company has received a show cause notice dated July 25, 2014 from the Reserve Bank of India interalia alleging violation of the RBI directions and circulars. Incase RBI decides to take action against this Company, its reputation may suffer.
- This Company has received a show cause notice dated July 2, 2013 from the Reserve Bank of India. Incase RBI decides to take action against this Company's ability to conduct business may be severely affected, which could in turn result in a material adverse effect on the business, prospect and results of operations.
- Company and its Directors are subject to certain legal proceedings and any adverse decision in such proceedings may have a material adverse effect on the business and results of operations.
- Company business faces increasing competition in the business which may result in declining interest margins.
- The financial performance of the company is primarily dependent on interest rate risk. If they are unable to manage interest rate risk in the future it could have an adverse effect on net interest margin, thereby adversely affecting the business and financial condition of the company.
- In case profits decline in the future too, there could be a delay in interest payment and repayment of principal invested.
How to invest?
You can login to your demat account and apply. In case you want to apply in physical form, the process is indicated in the prospectus.
SREI Infra Finance NCD Vs Muthoottu Mini Financiers NCD July 2015
- Interest: SREI Inf Finance NCD offers interest rates were effective yield would be 10.79% for 60 month cumulative option. Muthoottu Mini Financiers NCD for 72 months cumulative option, effective yield would be 12.25%. Hence Muthoottu Mini Financiers offers high interest rates.
- Credit Rating: SREI Infra Finance NCD’s are rated as CARE AA-, whereas Muthoottu Mini Financiers ratings are BBB-. Hence SREI Infra Finance rates high in credit rating.
- Profits: Both the companies are doing well in profits, however previous year profits are declined for both these companies which is a concern.
- NPA: Nonperforming assets for SREI Infra Finance for FY15 is 3.84%, whereas for Muthootu Mini Financiers is 0.71% for FY14 (FY15 nos not available). Non Performing assets are where the company is not getting repayment from people who has taken loan from the company. Low NPA is good as it would not impact profits. Hence Muthoottu Mini Financiers scores high in this regard.
Conclusion: Muthootu Mini Finance offers good interest rates on these NCD’s. However decline in profits is a concern. High risk investors can invest in Secured NCD’s, after considering negative factors indicated above.
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Muthoottu Mini Financiers NCD-July/Aug-2015
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