11.85% KLM Axiva Finvest NCD bonds July 2021 – Should you invest?
KLM Axiva Finvest NCD bonds July 2021 – Review
After 1 year, KLM Axiva Finvest is coming up with secured NCDs that would open for subscription on 5th July 2021. These NCDs offer interest rates up to 11.5% and yield up to 11.8%. This Non Banking Finance Company is operating from Kerala with registered office in Hyderabad and has a presence across South India. Your investment in these NCDs would get doubled in 79 months compared to Banks where your money would get doubled in more than 125 months. What are the risk factors you should consider before investing in such NCD’s? Should you invest in KLM Axiva Finvest NCD July 2021 or avoid?
About KLM Axiva Finvest Limited
They are a non-deposit taking systemically important non-banking finance company primarily serving low and middle income individuals and businesses that have limited or no access to formal banking and finance channels. They operate primarily in four business verticals: (i) gold loan business, lending money against the pledge of household, jewelry, (ii) micro, small and medium enterprises loan, (iii) personal loan and (iv) micro finance loan to women customers.
KLM Axiva Finvest NCD 2021 Issue Details
Here are the issue details of these NCDs.
KLM Axiva NCD Issue opens on 5th July 2021 and closes on 26th July 2021. The subscription can close early if it is fully subscribed.
It offers secure NCDs.
These NCD’s provide interest either monthly, yearly or on maturity depending on the option chosen.
It offers both secured NCD’s for 365 days, 400 days, 18 months, 2 years, 3 years, 5 years and 79 months.
Bond face value is Rs 1,000.
Minimum investment is for 5 bonds mean, you need to invest for a minimum of Rs 5,000. Beyond this you can invest in multiples of 1 bond.
These NCD bonds would be listed on BSE. Hence, these are liquid investments (provided the buyer is available on that date when you sell such NCD’s).
NCD’s can be invested through Demat account only.
Non-resident Indians (NRI’s) cannot invest in these NCD’s.
The issue size is Rs 100 Crores with an option to retain another Rs 50 Crores aggregating to Rs 150 Crores.
Vivro Financial Services is the Book Running lead Manager for this issue.
KLM Axiva Finvest NCD Interest Rates
KLM Axiva Finvest NCD Credit Ratings in 2021
These NCDs have been rated by Care ratings as CARE BB+. This indicates that instruments with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations.
How interest received from KLM Axiva Finvest NCD is taxed?
For investors who are applying through demat account, there would not be any TDS deduction.
Income tax on interest would be based on individual tax slab. Means, irrespective of whether company deducts TDS or not, investors should show the interest income in their income tax return and pay necessary income tax.
How are company financials?
It earned revenues of Rs 102.2 Crores for FY20 and Rs 126.5 Crores for FY21.
Its profits are Rs 0.5 Crores for FY20 and Rs 7.14 Crores for FY21.
Net Non-Performing Assets (NPA) are at 4.77% as on 31st March 2021.
What are the objects of the NCD issue?
Here are the objects of the offer.
1) For the purpose of onward lending, financing and repayment/prepayment of principal and interest on existing borrowings.
3) General Corporate Purposes
Why to invest?
1) It offers secured NCDs. Secured NCD’s are secured by movable assets, including book debts, receivables, etc. Means in case company gets windup due to bad performance, investors of NCD would get preference in re-payment of the principal and interest. However, there could be delays. Hence it is relatively safe to invest in such secured NCD’s.
2) Attractive interest rates up to 11.5% and yield up to 11.85%.
3) You can double your money in 79 months with these NCDs.
Why not to invest?
1) The company profits are small. Any abnormal expenses can wipe away such small profits. This can pose risk to NCD interest payment to its investors.
2) Spread of COVID-19 pandemic and the consequent nationwide lockdowns have impact on company business. This uncertainty might continue for few more quarters.
3) They have received Show-Cause Notice from RBI and any adverse action taken could affect its business and operations.
4) Its financial performance is particularly vulnerable to interest rate volatility. If they are unable to manage interest rate risk in the future it could have an adverse effect on net interest margin, thereby adversely affecting business and financial condition of the company.
5) Complete risk factors of KLM Axiva Finvest NCD of July 2021 can be read at risk factors indicated in the prospectus.
How to invest in these NCD bonds?
You can login to your demat account and apply under IPO/NCD/NFO section. These NCDs would get listed within 6 working days from the closure of the NCD subscription.
Should you invest in KLM Axiva Finvest NCD bonds of 2021?
KLM Aviva Finvest offers secured NCDs in July 2021. Secured NCDs offered by them have high interest rates / yield. However the company has low credit rating of BB+. Investing in NCDs in NBFC companies that too with low credit rating is high risk. You should stay away from putting your hard-earned money in such low credit rating NCDs. You can check for some of the high rated NCD’s that keep coming to market.
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