After long time, Muthoot finance is again coming up with secured NCD’s. Muthoot Finance NCD April 2018 Issue would open for subscription on 9th April, 2018. It is issuing secured Non convertible Debentures (NCDs) now. The yield is as high as 9% per annum. Such high yield is good compared to low interest rates offered by banks. Company is now offering 400 days to 60 months NCD's. Since these are for short to medium term, investors may get attracted towards that. Should you invest in Muthoot Finance NCD’s of Apr-2018 as other fixed income options are offering lowest rates? What are the risk factors one should consider before investing in Muthoot Finance NCD April 2018? You should read complete article before investing in these Non Convertible Debentures.
About Muthoot Finance Limited
Muthoot Finance is largest gold loan company in India in terms of loan portfolio and branch network. It has already issued several NCD’s in the past in the form of secured and unsecured NCD’s.
Details of Muthoot Finance NCD Issue – April 2018
Muthoot Finance is issuing secured redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 500 Crores with an option to retain over ssubscription totaling to Rs 3,000 Crores. It comes with 10 different options, which contains 400 days to 60 month tenure. The earlier issue of NCD it had highest tenure of 96 months.
The Muthoot Finance issue contains 10 options of NCD’s and all are secured NCDs.
About Muthoot Finance NCD Issue – April 2018
For secured NCD’s the assets are backed up for principal and interest. In case of anything happening to the company and company get closed, investors of NCD would still get their principal investment and interest.
Features of Muthoot Finance NCD Issue – April 2018
1) Issue opens on 9-April-2018
2) Issue closes on 8-May-2018
3) NCD’s are available in 10 different options.
4) Interest payable monthly, annual and cumulative, depending on the option of NCD.
5) The face value of the NCD bond is Rs 1,000.
6) 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.
7) These NCD bonds would be listed on BSE. Hence, these are liquid investments.
8) Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
9) ICRA has given a rating of ICRA AA/Stable and AA-Stable by Crisil, which indicates a high degree of safety for payment of principal and interest.
Here are the interest rates of Muthoot Finance NCD Issue – April 2018
How is the company doing in terms of Financials?
Revenues of the company have increased from Rs 4,919 Crores (FY 2015-16) to Rs 5,910 Crores (FY 2016-17).
Profits have increased from Rs 817 Crores (FY 2015-16) to Rs 1,207 Crores (FY 2016-17).
Why to invest?
1) Muthoot Finance is the largest gold loan financing company
2) It offers secure NCD’s also where your money is safe. Means in case of anything happening to the company, investors of NCD would still get the principal and interest. Hence it is safe to invest in such secured NCD’s.
3) It offers attractive interest rates between 8% to 9% per annum
Why not to invest?
1) Gold finance companies are riskier. Decline in gold prices (which happened last year), can pose high risk to such business.
2) Though Muthoot finance is offering secured NCDs, there could be delay in interest and repayment of principal on maturity.
How to apply?
If you have demat account, you can apply through your demat broker online. These can be easily sold at later point of time if you can take them in demat form, however you can sell at market price only. You can also apply in physical form by visiting the company website and downloading the application form and preparing the cheque and submitting at collection centres. You can download Muthoot Finance NCD prospectus here.
Conclusion: As indicated in my previous articles about Muthoot Finance NCD’s, while I am interested to get higher interest, I am equally interested to protect my investment. Since these are secured NCDs, these are relatively safer compared to unsecured NCDs. High risk investors can invest in these secured NCD after considering the risk factors indicated above.
Readers, have you investing in any NCD’s these days? What are your experiences on this?
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Muthoot Finance NCD Issue – April 2018
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