Kosamattam Finance is coming up with secured NCD bonds now. These bonds open for subscription on 13th July, 2022. Kosamattam Finance is a leading NBFC company in India. The NCD interest rates for Kosamattam Finance NCD are up to 9.5% and yield is up to 9.92%. These NCDs are offered for 400 days to 88 months tenure. These interests are paid either monthly or on maturity. Should you invest in Kosamattam Finance NCD issue in July, 2022? What are the risk factors one should consider before investing in such high risk NCDs?
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 July, 2022 – Issue Details
Subscription opens on 13-Jul-2022
Subscription closes on 4-Aug-2022
NCD’s are available in 8 different options. The tenures for these NCDs are for 400 days, 36 months, 42 months, 48 months, 54 months, 60 months and 88 months tenure.
Coupon interest rates are same for all investors and these are between 7% to 9.5%. Yield on these NCD bonds works out up to 9.92% 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 July 2022 NCD issue is Rs 175 Crores with an option to retain over subscription up to Rs 175 Crores totaling to Rs 350 Crores.
SMC Capitals is the lead manager for the issue.
Kosamattam Finance NCD – July-22 Interest rates
What are the credit ratings for these NCDs?
These NCDs have been rated as BWR BBB+/Positive by Brickwork Ratings which indicates 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-2019 – Rs 43.14 Crores
Year ending Mar-2020 – Rs 47.63 Crores
Year ending Mar-2021 – Rs 65.31 Crores
Year ending Mar-2022 – Rs 79.99 Crores
Why to invest in these NCDs?
1) These Kosamattam NCDs offer attractive interest rates where investors can get interest up to 9.5% per annum and yield up to 9.92%.
2) 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.
3) 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) The company has a credit rating of BBB+ / Positive from BWR Ratings. Bonds that have a credit rating with below A grade are considered as very high risk.
2) Covid pandemic has significant effect on the company operations and it may impact in future too.
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.
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Should you invest in Kosamattam Finance NCD’s?
These NCD’s offer high interest rates. Currently, banks are offering low interest rates, hence investors would get tempted to invest in such NCDs. These NCDs are rated as BBB+/Positive by BWR Ratings which are considered as low rating. Such credit ratings may further fall in future. Don’t forget about what happened in case of DHFL (investors lost their money) and SREI (where investors are yet to get their money after maturity). One should always invest in A rated NCDs to reduce such risk. For us, these are high risk investment options. Investors should consider these pointers before investing in such NCDs.
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