11% KLM Axiva Finvest NCD – Sep-22 – Should you subscribe?

KLM Axiva Finvest is coming up with secured NCD Issue that would open for subscription on 15th September, 2022. KLM Axiva Finvest is a non deposit taking systemically important NBFC in India. KLM Axiva Finvest NCD interest rates are up to 10.75% and yield works out up to 11.02%. Your money would get doubled in 82 months. Should you invest in KLM Axiva Finvest NCD 2022? What are the risk factors one should consider before investing KLM Axiva NCD 2022 issue?

Also read: When Auto sector is booming, should you invest in ICICI Pru Nifty Auto Index Fund?

About KLM Axiva Finvest Limited

They are a non-deposit taking and non – 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 enterprise loan

(iii) Personal loan and

(iv) microfinance loan to women customers.

KLM Axiva Finvest NCD – Sep-22 – Issue details, Ratings and Review

KLM Axiva Finvest NCD – Issue Details

KLM Axiva NCD Opening Date 15-Sep-22
KLM Axiva NCD Closure Date 12-Oct-22
Security Type Secured, Redeemable and Converted NCDs
Issue Size (Base) Rs 100 Crores
Issue Size (Shelf) Rs 100 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Minimum Lot size 5 bonds and 1 bond there after
Tenure 400 days to 5 years
Series Series I to X
Interest Payment frequency Monthly, Yearly and on Maturity
Listing on BSE – Within 6 working days

NRI’s cannot apply to this NCD subscription.

Vivro Financial Services is the lead manager for the issue.

KLM Axiva Finvest NCD Sep-22 Prospectus

KLM Axiva Finvest NCD Interest Rates

KLM Axiva Finvest NCD (KLM Axiva NCD) nterest Rates for Sep-22 issue

How is the NCD allocation done?

Here is how the NCDs would allocate to investors.

Allocation to Retail Investors 50%
Allocation to Institutional Investors 10%
Allocation to Non-Institutional Investors 40%

KLM Axiva Finvest NCD 2022 Ratings

The secured NCDs have been rated by Ind Ratings and Research as Ind BBB-; Stable.

The rating of NCDs by CARE indicates that instruments with this rating are considered to have a moderate risk of default regarding timely servicing of financial obligations.

KLM Axiva Finvest NCD – Are these secured NCD bonds?

These are senior secured bonds.

The NCDs would constitute secured obligations of company and shall have first ranking pari passu charge with existing secured creditors, on all movable assets including book debts and receivables, cash and bank balances, other movable assets, loans and advances, both present and future of the Company equal to the value of one time of the NCDs outstanding plus interest accrued thereon.

How is the company doing in terms of profits?

Its standalone profits are as below:

Year ended Mar-2020 – Rs 50.6 Lakhs

Year ended Mar-2021 – Rs 705.8 Lakhs

Year ended Mar-2022 – Rs 1,138.3 Lakhs

How the returns are taxed?

Since you need to apply through the demat form only, there would not be any TDS deduction on the interest paid on these NCD’s. It is immaterial whether the company would deduct TDS or not, one has to declare the NCD interest as income in their income tax returns and pay income tax based on the individual tax bracket.

KLM Axiva Finvest NCD 2022 – Why to invest?

1) The company is earning consistent and improving margins in the last few years. This indicates that this company has ability to consistently pay the interest rates for its creditors or NCD holders.

3) These NCDs offer attractive interest rates where you can get yield up to 11.02% per annum.

4) It issues Secured NCDs. In case of any non performance of the company and the company gets shut down for some reason, NCD investors would get preference in repayment of capital along with interest. Hence it is safe to invest in such secured NCD options. However, it is only preference is given to NCD investors and no guarantee that entire amount would be paid-back in such cases.

KLM Axiva Finvest NCD 2022 – Why not to invest?

1) Company NPA is high in the recent times. While its current net NPA for FY22 is 2.7%, its net NPA for FY21 was 4.68% and FY20 was 5.97%.

2) They have received Show-Cause Notice from RBI and any adverse action taken could affect its business and operations.

3) Company, its Promoter and Directors and its Group companies have been subject to search and seizure operations conducted by the Indian income tax authorities.

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 its net interest margin, thereby adversely affecting the business and financial condition of the company.

5) Its business requires substantial capital, and any disruption in funding sources would have a material adverse effect on its liquidity and financial condition.

6) High levels of customer defaults or delays in repayment of loans could adversely affect its business, financial condition and results of operations.

7) If they are unable to manage the level of NPAs in its Loan Assets, its financial position and results of operations may suffer.

8) Other Internal and external factors can be read at the risk factors section of the NCD prospectus.

How to apply KLM Axiva NCD Sep 2022 issue?

KLM Axiva Finvest NCD Issue of September 2022 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. Full form can be downloaded on the lead manager website. For more information on this you can refer prospectus.

Also Read: LIC New Pension Plus provides guaranteed additions – Should you invest?

Is KLM Axiva NCD safe?

KLM Axiva NCDs are rated by Ind Ratings as BBB-/Stable. NCD bonds with such ratings are considered as high risk.

KLM Axiva NCD Review – Should you invest?

KLM Axiva Finvest is offering secured NCDs that offers high interest rates up to 10.75% and yield up to 11.02%. When banks are providing low interest rates, KLM Axiva NCD bonds interest rates would tempt you.

These bonds carry a low credit rating of BBB- Stable by Ind Ratings which is high risk. Your capital could be at risk if such NBFC company gets into financial crisis.

Considering low credit rating, investors can avoid such NCD bonds as of now. They can invest in A / AA / AAA rated bonds, which keep coming to market now and then.

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Suresh KP

2 comments

  • Kamal Garg

    Not very sure whether some one should subscribe to a ‘BBB-Stable’ rated company, especially, when the imminent threat of recession in US, Eurozone and other large economic blocks is there. India, in general, may remain unscathed from this threat, but, huge and challenging concern would be there for the economy.

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