Kosamattam Finance NCD – April-2024 Issue – Details and Review

Kosamattam Finance is coming up with secured NCD bonds now. These bonds open for subscription on April 8, 2024. Kosamattam Finance is a leading NBFC company in India. The NCD interest rates for Kosamattam Finance NCD are up to 10% and yield is up to 10.47%. These NCDs are offered for 18 months to 88 months tenure. These interests are paid either monthly or on maturity. Should you invest in Kosamattam Finance NCD issue in April, 2024?

About Kosamattam Finance Limited

Company is a systemically important non-deposit taking NBFC primarily engaged in the gold loan business, lending money against the pledge of household, jewelry in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat and Telangana along with the Union Territory of Puducherry.

Kosamattam Finance NCD – April-2024 Issue Details

Subscription opening Date 08-Apr-24
Subscription closure Date 23-Apr-24
Issuing Security Name Kosamattam Finance Limited
Security Type Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base) Rs 125 Crores
Issue Size (Option to retain over subscription) Rs 125 Crores
Total issue size Rs 250 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Series Series I to VIII
Minimum Lot size 10 bonds and 1 bond there after
Tenure 18, 24, 30, 36, 39, 48, 54 and 88 Months
Interest Payment frequency Monthly and Cumulative
Listing on Within 6 working days on BSE
Lead Manager Smc Capitals Limited
Debenture Trustee/s Vistra Itcl India Limited
Registrar to the issue KFIN Technologies Limited

Kosamattam Finance NCD – April-2024 Interest rates

Options I II III IV V VI VII VIII
Frequency of Interest Payment Cumulative Monthly Cumulative Monthly Cumulative Monthly Cumulative Cumulative
Tenure (Months) 18 24 30 36 39 48 54 88
Coupon (% per Annum) NA 8.75% NA 9.50% NA 10.00% NA NA
Effective Yield (% per Annum) 8.52% 9.11% 9.00% 9.92% 9.42% 10.47% 9.43% 9.91%
Amount on Maturity (In Rs.) 1,130.50 1,000.00 1,240.00 1,000.00 1,340.00 1,000.00 1,500.00 2,000.00

What are the credit ratings of Kosamattam Finance NCD – April-2024?

These NCDs have been rated as A-Stable by India Ratings & Research Private Limited which indicate that instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

How is the company doing in terms of profits?

Here are the details of the profits of the company.

Year ending Mar-2019 – Rs 43.14 Crores

Year ending Mar-2020 – Rs 47.63 Crores

Year ending Mar-2021 – Rs 65.31 Crores

Year ending Mar-2023 – Rs 79.99 Crores

Why Invest in Kosamattam Finance NCD – April-2024?

  • These Kosamattam NCDs offer attractive interest rates where investors can get interest up to 10% per annum and yield up to 10.47%.
  • Kosamattam Finance generates consistent margins. This means that the company has ability to pay interest payment on time to its NCD holders without any delay.
  • 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.
  • Company has credit rating of A-/Stable from India Ratings. Such ratings are considered to have low credit risk.

Why not to Invest in Kosamattam Finance NCD – April-2024?

  • The company has a credit rating of A-/Stable from India Ratings. However, the credit ratings were at BBB till last year. Bonds that have a credit rating with below A grade are considered as very high risk.
  • Covid pandemic has significant effect on the company operations and it may impact in future too.
  • Such NBFC companies are subject to RBI inspection and any adverse action can affect the business.
  • Refer prospectus for complete risk factors indicated in the Kosamattam NCD April-24 Prospectus.

How to invest in 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 Kosamattam Finance NCD April-2024 issue?

These NCDs offer high interest rates up to 10% and yield works out to 10.47%. Company has good credit rating of A-/Stable from India Ratings.

On other hand, some of the small finance banks are offering up to 8.5% interest rates which are covered under DICGC too up to Rs 5 lacs.Till last  year (2022) the credit ratings of Kosamattam Finance NCD were low at BBB from BWR Ratings and these are upgraded to A-/Stable now through India Ratings.

Investors who understand both pros and cons indicated above and willing to take the risk can invest in such NCDs.

Suresh KP

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