Muthoottu Mini Financiers NCD – March / April, 2021 – Review
Muthoottu Mini Financiers is coming up with secured and unsecured NCD bonds now. These NCD bonds would open for subscription on 30th March, 2021. Muthoottu Mini Financiers is a leading NBFC company in India which is focused on providing loans against house hold gold jewellery. These NCDs are offered for 480 days to 84 months tenure. These interests are paid either monthly or on maturity. The interest rates for Muthoottu Mini Financiers NCD are up to 10.25% and yield is up to 10.75%. Should you invest in Muthoottu Mini Financiers NCD March, 2021? What are the risk factors one should consider before investing in such high risk NCDs?
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 March, 2021 – Issue Details
Subscription opens on 30-March-2021
Subscription closes on 23-April-2021
NCD’s are available in 7 different options. The tenure for these NCDs are for 480 days, 24 months, 42 months, 50 months, 61 months and 84 months.
Coupon interest rates for Category I, II III investors (including Retail investors) are between 9% to 10.25%. Yield on these NCD bonds works out up to 10.75% which is highest.
It issues secured NCDs + unsecured NCDs. Its unsecured NCDs are for 61 months + 84 months tenure NCDs.
Interest is payable monthly or maturity depending on the option chosen by the NCD investor.
The face value of the NCD bond is Rs 1000.
Minimum investment is for the 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 within 6 working days from the issue closure date. Hence these are some what liquid investments.
These are allotted on first come first serve basis. Hence the issue can be closed before this date if it is oversubscribed before the closure date.
NRI’s cannot apply to this NCD subscription.
The base issue size for March 2021 NCD issue is Rs 125 Crores with an option to retain over subscription up to Rs 125 Crores totaling to Rs 250 Crores.
Vivro Financial Services is the lead manager for the issue.
Interest rates of Muthoottu Mini Financiers March, 2021 NCD
What are the credit ratings for these NCDs?
These NCDs have been rated as IND BBB by India Ratings which indicate that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk.
How is the company doing in terms of profits?
Here are the details of profits of the company.
Year ending Mar-2020 – Rs 33.5 Crores
Half year ending Sep-2020 – Rs 19.46 Crores
Why to invest in these NCDs?
1) These Muthoottu Mini Financiers NCDs offer attractive interest rates where investors can get interest up to 10.25% per annum and yield up to 10.75%.
2) Muthoottu Mini Financiers generates consistent margins. This means that company has ability to pay interest payment on time to its NCD holders without any delay.
3) It issues secured and unsecured NCDs. Its secured NCDs are safe compared to unsecured NCDs. In case company gets wind-up/shut down for some reason, secured NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.
Why not to invest in these NCDs?
1) The company has a credit rating of BBB from Ind Ratings. Bonds that have a credit rating with below A grade are considered as very high risk.
2) Recent outbreaks of the novel coronavirus could have a significant effect on its results of operations and could negatively impact its business, revenues, financial condition and result of operations.
3) Refer prospectus for complete risk factors.
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How to subscribe to these NCDs?
This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.
Should you invest in Muthoottu Mini Financiers NCD in March, 2021?
Muthoottu Mini Financiers NCD offer high interest rates and yield. Banks are offering low interest rates, hence investors would get tempted with such high interest rate NCDs from Muthoottu Mini Financiers. These NCDs are rated as BBB by Ind Ratings which are considered as low rating. Such credit ratings may further fall in future. One should always invest in AAA rated NCDs. For me this NCD issue is HIGH RISK considering the credit rating provided by credit rating agency. I would advise investors to stay away from such high risk NCDs as of now.
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