9.5% Muthoottu Mini Financiers NCD Bonds Nov-2020 issue  – Should you invest?

Muthoottu Mini Financiers NCD Bonds Nov-2020 issue Review-2Muthoottu Mini Financiers NCD Bonds Nov-2020 issue – Review


Muthoottu Mini Financiers is coming up NCDs that would open for subscription on November 4, 2020. It is issuing secured NCD’s now. The interest rates are as high as 10.5%. It is offering NCDs of 480 days, 24  months, 36 months, 50  months, 60 months and 85 months tenure. Currently banks are offering low interest rates of 4% to 6% and investors might be looking for high interest rate fixed income options. Should you invest in Muthoottu Mini Financiers NCDs offer in November 2020? What are the risk factors one should consider before investing in such high risk NCDs.

Also Read: Rakesh Jhunjhunwala Portfolio of Penny and low priced stocks – Should you invest?

About  Muthoottu Mini Financiers Limited

They are a non-deposit taking systemically important NBFC in the gold loan sector lending money against the pledge of household gold jewelry in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry.

Muthoottu Mini Financiers NCD Nov 2020 Issue details

Muthoottu Mini Financiers is issuing secured redeemable Non Convertible Debentures (NCD’s) in November issue to the tune of Rs 100 Crores with an option to retain another Rs 100 Crores over subscription totaling to Rs 200 Crores. It comes with 7 different options, which contains 480 days, 24 months, 36 months, 50 months, 60 months and 85 months tenure NCDs.

About Muthoottu Mini Financiers Nov 2020 Secured NCD

They are offering secured NCD’s now in Nov 2020. 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 the 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 Muthoottu Mini Financiers NCD’s of Nov 2020

NCD Issue start date: 4-November-2020

NCD Issue closes on: 18-November-2020

NCD’s are available in 7 different options.

The interest on these NCDs are payable monthly and at maturity depending on the NCD option chosen.

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.

IND Ratings has rated these NCDs as IND BBB: Outlook Stable, indicate that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations and carry a moderate credit risk

Vivro Financial Services is the lead manager for this issue in 2020.

Download Muthoottu Mini Financiers NCD’s Prospectus Nov 2020

https://www.bseindia.com/downloads/ipo/Prospectus_031120201147.pdf

Muthoottu Mini Financiers NCD Interest Rates

How is the company doing in terms of Financials?

Here are the financial performance.

1) Its revenues have fallen from Rs 435.4 Crores in FY2017 to Rs 313 Crores in FY2020. Its revenues for the 3 months ended June, 2020 are at Rs 81.79 Crores compared to Rs 69.2 Crores of previous year quarter ending June, 2019.

2) It incurred loss of Rs 81 Crores in FY2017 vs profits of Rs 33.5 Crores in FY2020. Its profits for the quarter ending June, 2020 are at Rs 9.3 Crores compared to profits of Rs 2 Crores for the previous year quarter ending June, 2019.

3) Its gold loan business is around 95% of its overall business as on June 30, 2020.

3) Gross NPA is at 2.45% by end of June, 2020. Net NPA is at Rs 1.83% for similar period.

Why to invest?

1) This is a Leading NBFC company in India.

2) Attractive interest rates where one can get 10.5% interest.

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

Why not to invest in Muthoottu Mini Financiers Nov 2020 NCD?

1) Low credit rating from IND Ratings as IND BBB-; Outlook Stable.

2) Its revenues and profits are in a down trend in the last few years.

3) Their financial performance 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 their net interest margin, thereby adversely affecting the business and financial condition of the company.

4) You can refer all risk factors in the NCD prospectus.

How to apply these NCDs?

You need to apply these NCDs in demat form. If you have demat account, you can login to your account and go to IPO/NFO/NCD section and apply for the same. You can reach out to any of the lead managers websites to know more details on how to apply them.

When these NCDs would get listed on BSE?

These NCDs would get listed after 6 working days from the date of closure.

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Should you invest in Muthoottu Mini Financiers NCDs Nov 2020 issue?

They are offering secured NCDs now in November, 2020 issue. NCDs offered by them have high interest rates. However the company has low credit rating of BBB-; Outlook Stable. Investors should be cautious and should stay away investing in such low credit rating NCDs.

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Suresh KP
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13 comments

  • RAJESH P V

    I would like to buy the NCD’s and Bonds issued by Banks/ Company from Public iSSUE

    Examples of Banks
    1. South Indian Bank
    2. Karur Vysya Bank
    3. Axis Bank
    4.ICICI Bank
    5. Indus Ind Bank

    examples of Company
    1. TATA Motos Finance NCD
    2. TaTA capital Financial services
    3. HDB Financial Services

    PLEASE NOTE THESE ARE NEITHER AVAILABLE IN ASBA THRU BANK

    • You can buy NCD bonds either during the subscription period when these are issued (you can subscribe to our blog where we provide info in advance) or through stock exchange like you buy any stock

  • RAJESH P V

    Please list out the institutions in which we can create FD online?

  • RAJESH P V

    why ncd of banks are not listed through ASBA?
    How we can apply during IPO?

    • Hello Rajesh, Based on guidelines from SEBI, IPO goes through ASBA. For NCDs, the process is little different. Also NCDs would be issued on first come first serve basis. During NCD issue, one can subscribe on day-1 to get immediate allotment.

      • RAJESH P V

        i could not find any bank offering ncds through ASBA

        • I repeat, ASBA is only for IPOs and not NCDs. If you want to invest in NCDs, keep checking our website for latest NCD offers and on day-1, you can subscribe as these offered under first come first serve basis. Once fully subscribed the NCD issue would be closed irrespective whether the last date has arrived or not

  • RAJESH P V

    Any forthcoming NCD issue in December 2020

  • Dinesh

    Sir this is not correct information …pls don’t mislead people…

    • Dinesh, It is easy to say this is not correct. What is not correct? These NCDs are rated by IND Ratings as BBB (Any bond below AAA are high risk) and this info is in the NCD prospectus filed with SEBI and Stock exchanges. Do you say information filed with Govt is wrong? Don’t support for any low rated bonds by putting such comments.

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