Motilal Oswal Financial Services is coming up with Secured NCD Bonds which would open for subscription on April 23, 2024. Motilal Oswal Financial Services Limited is the full-service broker in India, with the highest gross brokerage revenue as of March 31, 2023. It offers interest rates up to 9.7%. These NCD’s are issued in 8 different series and for 24 months to 120 months tenure. Interest is paid either monthly, Annual or cumulative depending on the series chosen. Should you invest in Motilal Oswal Financial Services NCD’s of April, 2024 issue? What are the risk factors one should consider before investing in such high risk NCDs?
About Motilal Oswal Financial Services Limited
Motilal Oswal Financial Services Limited was incorporated in May 2005.
It is the full-service broker in India, with the highest gross brokerage revenue as of March 31, 2023, among players in the broking industry.
Its Group offers financial services such as broking, investment banking, asset management, private equity, wealth management, and housing finance.
Motilal Oswal Financial Services NCD – April-2024 Issue Details
| Subscription opening Date | 23-Apr-24 |
| Subscription closure Date | 07-May-24 |
| Issuing Security Name | Motilal Oswal Financial Services Limited |
| Security Type | Secured, Redeemable, Non-Convertible Debentures (Secured NCDs) |
| Issue Size (Base) | Rs 500 Crores |
| Issue Size (Option to retain over subscription) | Rs 500 Crores |
| Total issue size | Rs 1,000 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 | 24, 36, 60 and 120 Months |
| Interest Payment frequency | Monthly and Annually |
| Listing on | Within 6 working days on BSE |
| Lead Manager | Trust Investment Advisors Private Limited Motilal Oswal Investment Advisors Limited Nuvama Wealth Management Limited |
| Debenture Trustee/s | Beacon Trusteeship Limited |
Motilal Oswal Financial Services NCD April-2024 Prospectus
What are Motilal Oswal Financial Services NCD Interest Rates?
| Options | I | II | III | IV | V | VI | VII | VIII |
|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Annual | Cumulative | Annual | Cumulative | Monthly | Annual | Monthly | Annual |
| Tenure (Months) | 24 | 24 | 36 | 36 | 60 | 60 | 120 | 120 |
| Coupon (% per Annum) | 8.85% | NA | 9.10% | NA | 8.97% | 9.35% | 9.30% | 9.70% |
| Effective Yield (% per Annum) | 8.85% | 8.85% | 9.10% | 9.10% | 9.35% | 9.35% | 9.70% | 9.70% |
| Amount on Maturity (In Rs.) | 1,000.00 | 1,184.85 | 1,000.00 | 1,298.60 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 |
What are the Motilal Oswal Financial Services NCD ratings?
These secured NCD’s are rated as AA-/Stable by CRISIL Ratings and India Ratings and Research Limited which indicate that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.
How is the company doing in terms of profits?
Its consolidated profits are:
- Year ended Mar-2020 – 215 Crores
- Year ended Mar-2021 – 1,197 Crores
- Year ended Mar-2022 – 1,310 Crores
- Year ended Mar-2023 – 932 Crores
- 9 months ended Dec-23 – 1,717 Crores
Why to invest in Motilal Oswal Financial Services NCD?
- These NCDs offer high interest rates, which range between 8.85% to 9.7%.
- These are secured NCDs. If the company gets shut down or get into financial crisis for some reason, 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 secured NCDs.
- The company is earning consistent margins in the last few years.
- Company NCD’s are rated as AA/Stable by CRISIL Ratings and India Ratings and Research. While such ratings can change in future, investing in secured NCDs of AA rated NCD bonds are always good.
Why not to invest in Motilal Oswal Financial Services NCD?
Here are the risk factors of investing in these non-convertible debenture bonds.
- Regulatory Compliance: The company operates in a heavily regulated environment, and changes in laws or regulations could negatively impact its business, finances, and operations. Non-compliance with regulatory inspections could result in penalties and harm the company’s reputation.
- IT System Risks: The company’s operations heavily rely on information technology, making it vulnerable to risks associated with IT system failures or inadequacies.
- Dependency on Brokerage Services: A significant portion of the company’s revenue and profitability comes from its broking and related services business. Any reduction in brokerage fees could adversely affect its financial performance.
- Proposed Scheme of Arrangement: The company plans to file a Scheme of Arrangement, which is subject to regulatory approvals. However, issues such as litigation involving company executives and uncertainties regarding regulatory approvals may negatively impact the business, finances, and operations if the scheme is approved.
- Operational Risks in Financial Services Industry: There are inherent operational risks associated with the financial services industry, which, if realized, could have a material adverse effect on the company’s business, finances, and operations.
- Refer to NCD prospectus for complete risk factors.
Should you invest in Motilal Oswal Financial Services NCD?
- Motilal Oswal Financial Services offers secured NCDs in April, 2024 issue. These NCDs offer high interest rate up to 9.7%. These NCDs have good credit rating of AA-/Stable by CRISIL and India Ratings and Research.
- On the other side, one should understand the risks involved in investing in NCD bonds of the company highlighted in the risk factors section.
High-risk investors can invest in these NCD bonds after understanding all these risk factors.
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Sir can you please suggest me i am doing SIP from 1.5 years is it fine or should i remove all 3 except SBI and should i start to invest in Motilal oswal small cap fund for 5 years
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SBI Small Cap Fund – Regular Plan – Growth ₹ 15,000
Mirae Asset Focused Fund Regular Plan Growth ₹ 10,000
Axis Bluechip Fund – Regular Plan – Growth ₹ 10,000