10% Muthoot Homefin India NCD April 2019 – Who can invest?

Muthoot Homefin India NCD April 2019 ReviewMuthoot Homefin India NCD April 2019 Review


Muthoot Homefin India NCD for April 2019 would open for subscription on 8th April, 2019. Muthoot Homefin India is a non-deposit taking housing finance company and were registered with the National Housing Bank. It is issuing secured NCD’s. The yield is as high as 10% per annum and attracting investors now. It is offering NCDs of 24 months, 38 months, 60 months and 90 months tenure. You can double money in 7.5 years with these NCDs. Investors are still scared to invest in NCDs as though they offer higher interest or yield, these are still high risk with recent scams. Should you invest in  Muthoot Homefin India NCD of April 2019? What are the hidden factors an investor should consider before investing Muthoot Homefin India NCD of 2019?

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About  Muthoot Homefin India Limited


They are a non-deposit taking housing finance company and were registered with the National Housing Bank. They focus on providing affordable housing loans to Lower Middle Income groups and Economically Weaker Sections of society in tier 2, tier 3 and tier 4 cities. They are promoted by Muthoot Finance Limited.

Its  customers comprise primarily informal and formal salaried workers and self-employed individuals. As of September 30, 2018, 58.88% of its loan portfolio consisted of loans made to salaried individuals, 2.26% of its  loan portfolio consisted of loans made to individuals who are professionals or self-employed, and 38.87% of our loan portfolio consisted of loans made to individuals who are businessmen. As on September 30, 2018, they provided loans to customers located in 11 states and one union territory, namely Andhra Pradesh, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Punjab, Rajasthan, Telangana, Uttar Pradesh, and Chandigarh.

Muthoot Homefin India NCD Mar 2019 Issue details


Muthoot Homefin India is issuing secured redeemable Non Convertible Debentures (NCD’s) to the tune of Rs 150 Crores with an option to retain another Rs 150 Crores over subscription totaling to Rs 300 Crores. It comes with 10 different options, which contains 24 months, 38 months, 60 months and 90 months tenure NCDs.

About Muthoot Homefin India Mar 2019 Secured NCD


They are offering secured NCD’s now in April 2019. The NCDs would constitute secured and senior obligations of the Company and shall be first ranking pari passu with the existing secured creditors on all loans and advances/ book debts/ receivables, both present and future of Company equal to the value one time of the debentures outstanding plus interest accrued thereon, and subject to any obligations under applicable statutory and/or regulatory requirements.

Features of   Muthoot Homefin India NCD of Mar 2019


Issue start date: 8-April-2019

Issue end date: 7-May-2019

NCD’s are available in 10 different options.

The interest of these NCDs is payable monthly, annually and on maturity.

The face value of the NCD bond 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.

Non-resident Indians (NRI’s) cannot invest in these NCD’s.

Crisil have rated these NCDs as AA/Stable. The rating of AA/Stable indicates that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

Edelweiss Financial Services is the lead manager for this issue.

You can download DRH of Muthoot Homefin India NCD 2019 here.

https://muthoothomefin.com/uploads/report/14-march-Muthoot-Homefin-(India)-Limited.pdf

Here are the interest rates on the April 2019 NCD’s of Muthoot Homefin India


Muthoot Homefin India NCD April 2019-Interest Rates

What is the issue break-up?


These details would be updated as soon as we get this info

1) Institutional Portion

2) Non Institutional Portion

3) Retail Investors

How is the company doing in terms of Financials?


Here are the financials:

1) Its revenues are at Rs 24.16 Crores in FY2017 to Rs 117.06 Crores in FY2018. Its revenues for 6 months ended Sep-2018 was Rs 103.97 Crores.

2) Its profits are at Rs 5.28 Crores in FY2016 to Rs 22.25 Crores in FY2018. Its revenues for 6 months ended Sep-2018 was Rs 20.97 Crores.

Why to invest?


1) Attractive interest rates where one can get upto 10% yield.

2) It is issuing secured NCDs which are safe to invest compared to other unsecured NCDs.

3) Low credit rating from CRISIL Ratings of AA/Stable.

Why not to invest in Muthoot Homefin India Mar 2019 NCD?


1) As an HFC, they have significant exposure to the real estate sector and any negative events affecting this sector could adversely affect its business and result of operations.

2) Its business has been growing consistently in the past. its inability to maintain the growth may have a material adverse effect on its business, results of operations and financial condition.

3) As an HFC, they face the risk of default and non-payment by borrotheyrs. Any such defaults and non-payments would result in write-offs and/or provisions in its financial statements which may have a material adverse effect on its profitability and asset quality.

4) Any increase in the levels of NPAs in its loan portfolio, for any reason whatsoever, would adversely affect its business, results of operations and financial condition.

5) Its business is particularly vulnerable to volatility in interest rates.

6) They may experience difficulties in expanding its business into new regions and markets.

7) They are exposed to risks related to geographic concentration of its loan portfolio in the theystern states of India.

8) In order to sustain its growth, they will need to maintain a minimum Capital Adequacy Ratio (“CAR”).

9) There is no assurance that they will be able to access the capital markets when necessary in order to maintain such a ratio.

10) They are subject to periodic inspections by the NHB. Non-compliance with the NHB’s observations made during any such inspections could adversely affect its reputation, business, financial condition, results of operations and cash flows.

11) You can refer all risk factors in the Final prospectus of the company.

How to apply  Muthoot Homefin India NCD Issue of 2019?


You can apply these NCDs in demat form only. If you have demat account, you can login to your account and go to IPO/NFO/NCD section and apply for the same. The process of applying NCD would be through ABSA (Your amount would be blocked initially and upon allotment, your amount would be deducted and NCD allotment would be done, else your amount would be unblocked) You can reach out to any of the lead managers websites to know more details on how to apply them.

How Muthoot Homefin India April 2019 NCD are taxed?


Since you need to apply through the demat form only, there would not be any interest on the NCD’s. It is immaterial whether the company would deduct TDS or not, one has to declare the interest in their income tax returns and pay income tax based on the individual tax bracket.

When this Muthoot Homefin India NCD of 2019 would get listed on BSE?


These Muthoot Homefin India Limited NCDs of April, 2019 would get listed after 6 working days from the date of closure. Means it would get listed approx. on 16th May, 2019 assuming that it would continue till 7th May, 2019 i.e. the last date of subscription. If it is subscribed earlier and subscription closes, it would get listed after 6 days from such closure.

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Should you invest in Muthoot Homefin India NCD of April 2019?


Like I said earlier, please ask few questions before you want to invest in these NCDs.

1) Though  Muthoot Homefin India is offering secured NCDs, we are seeing that NBFC companies are delaying the interest payment due to the liquidity crunch in the company. Do you want to invest in such NCD’s then?

2) These NCD’s are for 24 months, 38 months, 60 months and 90 months tenure. Do you want to park your money in high risk NCD for 5 to 7.5 years? We do not know how the company would perform beyond 3-5 years, hence you should always invest in short term NCDs. You can look for 24 moths or 38 months secured NCDs as these are for short term and they are secured in nature.  

3)   Muthoot Homefin India NCD offers yield up to 10% interest per annum, however is high risk. If you are a high risk taker, investing in some of the diversified portfolio of large cap, diversified and balanced mutual funds can fetch you around 15% annualised returns.

Conclusion:  Muthoot Homefin India NCDs offers high interest rates. Secured NCDs are somewhat better compared to unsecured. If you are a high risk taker and willing to invest in such companies even after recent financial crunch and Scams, you can consider investing in Secured NCDs for 24 months and 36 months tenure NCDs. However, you should be willing to take the risks indicated above.

Readers, do you feel these NCDs are worth investing?

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Suresh KP

Muthoot Homefin India NCD April 2019 Review

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