12.13% Chemmanur Credits and Investments NCD – Dec-22 issue

Chemmanur Credits and Investments is coming up with secured NCD bonds now which would open for subscription on 14th December, 2022. Chemmanur Credits and Investments is a non deposit taking NBFC company in India. The NCD interest rates for Chemmanur Credits and Investments NCD are up to 11.5% and yield is up to 12.13%. These NCDs are offered for 366 days to 74 months tenure. These interests are paid either monthly or on maturity. Should you invest in Chemmanur Credits and Investments NCD issue in December, 2022?

Also Read: How does Smallcase investments work?

About Chemmanur Credits and Investments Limited

Company is a non-deposit taking, non-banking financial company registered with the RBI.

It is primarily engaged in the gold loan sector lending money against the pledge of household gold jewellery in the state of Kerala, Tamil Nadu and Karnataka.

They also provide Microfinance Loans, business and personal loans, money transfer services and distribution of third party insurance products. They have been engaged in the lending business for more than 11 years and are based in Kerala, India. As of September 30, 2022, they operated through 161 branches located across 3 states, namely Kerala, Tamil Nadu & Karnataka managed through its registered office located in Thrissur, Kerala and they employ 881 persons in its business operations.

Chemmanur Credits and Investments NCD – Dec-22 issue details, Interest Rates, Credit Rating and Review

Chemmanur Credits and Investments NCD Dec-2022 – Issue Details

Subscription opens on 14-Dec-2022

Subscription closes on 6-Jan-2023

NCD’s are available in 8 different options. The tenures for these NCDs are for 366 days to 74 months tenure.

Coupon interest rates are same for all investors and these are between 9.5% to 11.5%.  Yield on these NCD bonds works out up to 12.13% which is highest.

These are secured NCDs.

Interest is payable monthly or on 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 somewhat 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 December 2022 NCD issue is Rs 50 Crores with an option to retain over subscription up to Rs 50 Crores totaling to Rs 100 Crores.

Vivro Financial Services is the lead manager for the issue.

Chemmanur Credits Dec-2022 NCD Prospectus Link

Chemmanur Credits and Investments NCD Interest Rates – Dec-22

Options Frequency of Interest Payment Tenor in months Coupon Rate (Retail) Effective Yield (% per Annum) Amount on Maturity (Rs)
I Monthly 366 days 9.50% 9.92% 1,000
II Monthly 18 10.50% 11.02% 1,000
III Monthly 24 10.75% 11.30% 1,000
IV Monthly 36 11.00% 11.57% 1,000
V Monthly 60 11.50% 12.13% 1,000
VI Cumulative 24 NA 10.75% 1,227
VII Cumulative 36 NA 11.00% 1,368
VIII Cumulative 74 NA 11.90% 2,000

What are the credit ratings for these NCDs?

These NCDs have been rated as CRISIL BBB-/Stable by CRISIL Ratings which indicate that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.

How is the company doing in terms of profits?

Here are the details of the profits of the company.

  • Year ending Mar-2020 – Rs 8.5 Crores
  • Year ending Mar-2021 – Rs 9.23 Crores
  • Year ending Mar-2022 – Rs 4.31 Crores
  • 3 months ending Jun-22 – Rs 0.52 Crores

Why to invest in these NCDs?

1) These Chemmanur Credits NCDs offer attractive interest rates where investors can get interest up to 11.5% per annum and yield up to 12.13%.

2) It issues secured NCDs. These NCDs are safe compared to any other unsecured NCDs. In case a 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) Chemmanur Credits and Investments profits are in declining mode.

2) Company has a credit rating of BBB-Stable. Investors should always invest A / AA / AAA rated NCD, which is little safer compared to these bonds.

3) Such NBFC companies are subject to RBI inspection and any adverse action can affect the business.

4) Refer prospectus for complete risk factors.

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.

Also Read: How PPF helps you and your spouse to create 1 Crore?

Should you invest in Chemmanur Credits and Investments NCD’s?

These NCDs offer high interest rates up to 11.5% and yield works out to 12.13%.  Even small finance banks are offering up to 8% interest rate only, hence it looks as attractive NCD bonds.

On the other hand, the company has a BBB credit rating, which is considered as a low credit rating. Also company profits are on declining mode.

Investors should not forget about NBFC’s that defaulted investors on NCD payments and companies which have delayed or delaying NCD interest payments to its investors.

Like I always indicated earlier, investors should invest in A / AA / AAA rated NCD bonds, which are little safe compared to low credit rating bonds while the risk is not 100% eliminated.

Personally, I would like to avoid such NCD bonds as of now.

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Suresh KP

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