Kosamattam Finance is set to launch its secured NCD bonds in November 2024. As a prominent NBFC in India specializing in gold loans, Kosamattam Finance offers attractive interest rates of up to 10.25%, with yields reaching 10.75%. The NCDs are available with tenures ranging from 18 months to 84 months, with interest payments offered either monthly or cumulative. Should you consider investing in the Kosamattam Finance NCD in November 2024? Let’s explore the details.
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 – Nov-2024 Issue Details
| Subscription Dates | November 25, 2024 – December 6, 2024 |
| Issuing Security Name | Kosamattam Finance Limited |
| Security Type | Secured, Redeemable, Non-Convertible Debentures (Secured 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 | Series I to VIII |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 18, 24, 30, 36, 39, 48, 60 and 84 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 – Nov-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 | 60 | 48 | 84 |
| Coupon (% per Annum) | NA | 9.25% | NA | 10.00% | NA | 10.25% | NA | NA |
| Effective Yield (% per Annum) | 9.00% | 9.65% | 9.41% | 10.47% | 9.75% | 10.75% | 10.67% | 10.41% |
| Amount on Maturity (In Rs.) | 1,138.00 | 1,000.00 | 1,252.00 | 1,000.00 | 1,353.00 | 1,000.00 | 1,500.00 | 2,000.00 |
What are the credit ratings of Kosamattam Finance NCD – Nov-2024?
These NCDs have been rated as IND 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-2022 – Rs 80.0 Crores
- Year ending Mar-2023 – Rs 107.05 Crores
- Year ending Mar-2024 – Rs 113.7 Crores
Why Invest in Kosamattam Finance NCD – Nov-2024?
- These Kosamattam NCDs offer attractive interest rates where investors can get interest up to 10.25% per annum and yield up to 10.75%.
- Kosamattam Finance generates consistent margins. Investors should always invest in companies that generate consistent profits.
- 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 – Nov-2024?
- The company has a credit rating of A-/Stable from India Ratings. However, the credit ratings were at BBB till 2022. 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.
- In the past there has been delay in repayment of capital and interest on the NCDs by several NBFC companies.
- Refer prospectus for complete risk factors indicated in the Kosamattam NCD Nov-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 Nov-2024 issue?
- These NCDs offer high interest rates up to 10.25% and yield works out to 10.75%. Company has good credit rating of A-/Stable from India Ratings.
- On other hand, some of the small finance banks are offering up to 9% interest rates which are covered under deposit insurance too up to Rs 5 lacs. Till 2022, the credit ratings of Kosamattam Finance NCD were low at BBB from BWR Ratings and these are upgraded to A-/Stable later-on.
Investors who understand both pros and cons indicated above and willing to take the risks can invest in such NCDs.
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