11.57% KLM Axiva Finvest NCD Sep-2021 – Should you invest?
KLM Axiva Finvest NCD bonds Sep-2021 – Should you invest?
KLM Axiva Finvest is coming up with secured NCDs that would open for subscription on 30th September 2021. These NCDs offer interest rates up to 11.25% and yield up to 11.57%. 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 80 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 Sep 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 – Sep-21 / Oct-21 Issue Details
Here are the issue details of these NCDs.
KLM Axiva NCD Issue opens on 30th Sep 2021 and closes on 26th Oct 2021. These NCDs are issued on first come first serve basis, hence 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 366 days, 400 days, 18 months, 2 years, 3 years, 5 years and 80 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 100 Crores aggregating to Rs 200 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+/Stable. 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.
Why to invest in KLM Axiva Finvest NCD?
1) It offers secured NCDs. Secured NCD’s are secured by movable assets, including book debts, receivables, etc. Means in case company gets shut down or get into financial crisis for some reason, 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 11.25% and yield up to 11.57%.
3) You can double your money in 80 months with these NCDs.
Why not to invest in KLM Axiva Finvest NCD?
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) Company’s NPAs are high at 4.77% for FY2021.
3) Spread of Covid-19 pandemic and the consequent nationwide lockdowns have impacted several businesses. The future is uncertain and can affect the company business.
3) Company has received show cause notice from RBI and adverse actions taken could affect its business.
4) Company, its Promoters and Directors have subject to search and seizure operations conducted by Indian Income Tax Authorities.
5) Company financial performance is particularly vulnerable to interest rates volatility. If they are unable to manage the interest rate risk in future, it could have an impact effect its net interest margin and can impact company financial condition.
6) Company business requires substantial capital. Any disruption in funding sources can have material impact on financial condition of the company.
7) Complete risk factors can be read in the NCD prospectus.
How to invest in these NCD bonds?
You can login to your demat account and visit NCDs section. You can apply for the no of NCDs and make the payment / allocation of funds.
Should you invest in KLM Axiva Finvest NCDs?
KLM Aviva Finvest offer secured NCDs in Sep 2021 issue. 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. NBFC NCDs poses risk of delaying the interest and repayment of capital. However, secured NCDs can provide some security. High risk investors can apply for such NCDs after considering the risk factors. Moderate to low-risk investors should stay away from such NCDs.
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