Kosamattam Finance NCD Bonds Sep-2023 – Issue details and Review
Kosamattam Finance is coming up with secured NCD bonds now. These bonds open for subscription on 8th September, 2023. 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 20 months to 88 months tenure. These interests are paid either monthly or on maturity. Should you invest in Kosamattam Finance NCD issue in September, 2023?
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 September, 2023 – Issue Details
|Subscription opening Date||08-Sep-23|
|Subscription closure Date||22-Sep-23|
|Issuing Security Name||Kosamattam Finance Limited|
|Security Type||Secured, Redeemable and Non-Convertible NCDs|
|Issue Size (Base)||Rs 100 Crores|
|Issue Size (Option to retain over subscription)||Rs 100 Crores|
|Total issue size||Rs 200 Crores|
|Issue price||Rs 1,000 per bond|
|Face value||Rs 1,000 per bond|
|Series||I to VIII|
|Minimum Lot size||10 bonds and 1 bond there after|
|Tenure||24 to 96 months|
|Interest Payment frequency||Monthly and on Maturity|
|Listing on||Within 6 working days on BSE|
|Lead Manager||SMC CAPITALS LIMITED|
|Debenture Trustee/s||VISTRA ITCL (INDIA) LIMITED|
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.
Kosamattam Finance NCD – September-22 Interest rates
|Frequency of Interest Payment||Cumulative||Monthly||Cumulative||Monthly||Cumulative||Monthly||Cumulative||Cumulative|
|Coupon (% per Annum)||NA||8.75%||NA||9.25%||NA||10.00%||NA||NA|
|Effective Yield (% per Annum)||8.52%||9.11%||8.85%||9.65%||9.25%||10.47%||9.43%||9.91%|
|Amount on Maturity (In Rs.)||1146.00||1000.00||1236.00||1000.00||1333.00||1000.00||1500.00||2000.00|
What are the credit ratings for these NCDs?
These NCDs have been rated as IND A-/Stable by India Ratings 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 to invest in these NCDs?
- 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 these NCDs?
- The company has a credit rating of A-/Stable from India Ratings. However, the credit ratings were 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.
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’s of Sep-2023?
- 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 the credit ratings were low at BBB from BWR Ratings and these are upgraded to A-/Stable now through India Ratings.
- 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. Since these are upgraded from BBB rating to A rated bonds, one should relook at this aspect too before jumping.
- Investors who understand both pros and cons indicated above and willing to take the risk can invest in such NCDs.
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