9% Muthoot Finance NCD Issue – April 2018 – Who can invest?

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.

Also Read: Best Mutual Funds to invest which has Aggressive Strategy

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


Interest rates of Muthoot Finance NCD Issue - April 2018How 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.

Also Read: Revised Small Saving Scheme Interest Rates for 2018-2019

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?

If you enjoyed this article, share this with your friends and colleagues through Facebook and Twitter.

Suresh

Muthoot Finance NCD Issue – April 2018

Suresh KP

20 comments

  • Ramana

    Hello Sir

    I am a customer of ICICI direct and I have not seen Muthoot finance being listed today.

    Internet searches also not revealing anything on why it was not listed.

    Can you please update and if possible, provide any new date of this NCD offer ?

    Also, I have been a keen follower of your website for the past two years. It will be very useful if you can consider adding a link to the actual offer document in any published post about a new offer.

    Thank you again for your initiative in writing these blog posts

    • Hi Ramana, These are listed after the offer is closed and after 2-3 weeks time. In ICICI Direct, go to equity —> Place Order —> Type “Muthoot”, you would see all listed NCDs of Muthoot

  • vivek

    is their any addtioanl interest for senior citizen deposit ?

  • vivek

    I don’t this this is for high risk taker . banks look high risk look at pnb , if its secure its as secure as fd if its from a good company , so I feel its worth to apply

  • krish

    What is the meaning of secured, in the context that, if Muthoot diverts the borrowing into other entities/businesses and fail and shut shop? Whether the security is good enough or not, will become clear, at that point only. Who is there to verify that security is really good enough and will cover the borrowings. After banking frauds, there is no trust on systems or words called “secured”

    • I agree Krish. One can vouch only when such companies fail to honor payment of interest or repayment of capital.

    • vivek

      hey kirsh , if u be so negative I don’t think u can ever earn higher so its better to take little risk like this , I can bet u muthut wont shut

  • Mahavir Gusain

    Could you kindly review the FDs offered by Tamilnadu Power Finance and Infrastructure Development Corporation and Tamilnadu Transport Development Finance Corporation? Are these safe enough for senior citizens to invest in? Thanks and regards.

    Mahavir Gusain

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