Muthoot Finance Vs. Muthoot Fincorp Vs. Kosamattam Finance NCD – Apr-2023 issue – Which is the best one?

There is a flood of NCD’s that are coming up now in April, 2023. Last week, Edelweiss financial services and Indiabulls Commercial Credit NCDs came from subscription. Now this week, there is Muthoot Finance, Muthoot Fincorp and Kosamattam Finance NCD’s subscription would open. Among these 3 NCD bonds which is best for investment now?

Also Read: Mahila Samman Savings Scheme 2023 Details

Muthoot Finance NCD – Apr-2023 issue details

Muthoot finance Limited is Kerala based gold loan NBFC company.

These NCD’s open for subscription on 12-Apr-23 and closes on 26-Apr-2023.  These are allotted on first come first serve basis, hence can close before this date.

These are secured NCDs.

Issue size is Rs 75 crores with an option to retain over subscription of Rs 225 Crores totalling to Rs 300 Crores.

The NCD bond value is Rs 1,000 minimum lot size is 10 bonds.

These are available in 25, 37 and 61 months tenure.

Interest is paid monthly and yearly depending on the series of the NCD.

Interest Rates on Muthoot Finance NCD are as below:

Series Frequency Tenor Interest % Yield % Maturity Amt
I Monthly 37 7.75% 8.25% 1,000
II Monthly 61 7.85% 8.35% 1,000
III Annual 25 7.75% 8.25% 1,000
IV Annual 37 8.00% 8.50% 1,000
V Annual 61 8.10% 8.60% 1,000
VI NA 37 NA 8.50% 1,286
VII NA 61 NA 8.60% 1,521

Muthoot Fincorp NCD – Apr-2023 issue details

Muthoot Fincorp Limited is Non deposit taking NBFC company.

These NCD’s open for subscription on 12-Apr-23 and closes on 26-Apr-2023.  These are allotted on first come first serve basis, hence can close before this date.

These are secured NCDs.

Issue size is Rs 150 crores with an option to retain over subscription of Rs 150 Crores totaling to Rs 300 Crores.

The NCD bond value is Rs 1,000 minimum lot size is 10 bonds.

These are available in 27, 42, 60 and 84 months tenure.

Interest is paid monthly, yearly or on maturity depending on the series of the NCD.

Interest Rates on Muthoot Fincorp NCD are as below:

Series Frequency Tenor Interest % Yield % Maturity Amt
I Monthly 27 8.40% 8.71% 1,000
II Monthly 42 8.65% 9.00% 1,000
III Monthly 60 8.80% 9.15% 1,000
IV Monthly 84 9.00% 9.37% 1,000
V Annual 60 9.15% 9.15% 1,000
VI Cumulative 27 NA 8.71% 1,207
VII Cumulative 42 NA 9.00% 1,353
VIII Cumulative 84 NA 9.37% 1,873

Kosamattam Finance NCD – Apr-2023 issue details

Kosamattam Finance Limited is Non deposit taking NBFC company primarily in gold loan business.

These NCD’s open for subscription on 11-Apr-23 and closes on 25-Apr-2023.  These are allotted on first come first serve basis, hence can close before this date.

These are secured NCDs.

Issue size is Rs 150 crores with an option to retain over subscription of Rs 150 Crores totaling to Rs 300 Crores.

The NCD bond value is Rs 1,000 minimum lot size is 10 bonds.

These are available in 15 to 88 month tenure.

Interest is paid monthly and yearly depending on the series of the NCD.

Interest Rates on Kosamattam Finance NCD are as below:

Series Frequency Tenor Interest % Yield % Maturity Amt
I Cumulative 15 NA 8.50% 1,107
II Monthly 24 8.75% 9.11% 1,000
III Cumulative 30 NA 8.85% 1,236
IV Monthly 36 9.00% 9.38% 1,000
V Cumulative 39 NA 9.25% 1,333
VI Monthly 48 9.50% 9.92% 1,000
VII Cumulative 54 NA 9.43% 1,500
VIII Cumulative 88 NA 9.91% 2,000

Muthoot Finance Vs. Muthoot Fincorp Vs. Kosamattam Finance NCD – Apr-2023 issue – Which is better?

#1 – Secured Bonds – All these 3 bonds are secured NCD bonds. Means even if such companies get into financial crisis and shut down for some reason, NCD bond investors are given preference in repayment of capital and interest.

Also Read: 5 Mutual Funds that doubled every 5 years consistently

#2 – Rate of Interest – Mutooth finance comes with lowest rates, followed by Muthoof Fin Corp.  Among these 3 NCD bonds, Kosamattam finance offers high interest rates.

#3 – Tenure of NCD Bonds – Muthoot Finance offers up to 61 month tenure while Muthoot Fincorp and Kosamattam finance offers for 84 and 88 months. Means all these 3 bonds are available for short to medium term of 1 to 5 years, however later 2 companies offer for 7+ years.

#4 – Credit Rating – While Muthoot Finance and Muthoot Fincorp NCDs are rated as AA stable by ICRA and CRISIL respectively, Kosamattam Finance NCDs are rated as A-Stable by IND Ratings.  One should note that in early 2022, Kosamattam Finance NCDs were rated as BBB by BWR Ratings.

#5 – Company Profits – All these 3 companies profits are increasing year on year.

Muthoot Finance profits grew from Rs 3,168 Crores in FY20 to Rs 4,031 Crores in FY22. Muthoot Fincorp profits grew from Rs 257.9 Crores in FY20 to Rs 412.5 Crores in FY22. Kosamattam Finance profits grew from Rs 47.6 Crores in FY20 to Rs 78.9 Crores in FY22.

#6 – Risk Factors – All these 3 companies have similar risk factors of an NBFC companies. I repeat again for readers.

Beyond NBFC scams, there were delays in payment of principal amount and interest from some of the NBFC companies. Your money could be at risk. Here is a company specific risk factors as per NCD prospectus.

Muthoot Finance NCD – Apr-23 – Risk Factors

Instability of global and Indian economies and banking and financial sectors could affect the liquidity of the company, which could have a material adverse effect on company’s financial condition.

Unanticipated turbulence in interest rates can affect company performance.

Any disruption or downturn in the economy of southern India can affect the company.

The company’s ability to control or reduce the level of stage 3 assets in its loan portfolio can affect the company.

Muthoot Fincorp NCD – Apr-23 – Risk Factors

Scheduled commercial banks and payment banks have been directed not to open and maintain current accounts for customers who have availed credit facilities in the form of cash credit (CC) /overdraft (OD) from the banking system. Implementation of the aforesaid direction without providing an alternate mechanism for financial institutions transacting with scheduled commercial banks and payment banks to withdraw and deposit cash may adversely affect company business, results of operations and financial condition.

The Company’s credit profile may take an impact because of real estate property acquisition, since such acquisitions brings real estate sector risks.

Company financial performance is particularly vulnerable to interest rate risk.

Kosamattam Finance NCD – Apr-23 – Risk Factors

They have been subject to an inspection by the RBI and any adverse action taken could affect company business and operations.

Company and some of its promoter directors are subject to certain legal proceedings and any adverse action in such proceedings can affect company business.

Investors need to refer complete risk factors from the respective NCD prospects of the companies.

Also Read: Top Rated Mutual Funds from ValueResearch (18% to 22%)

Muthoot Finance Vs. Muthoot Fincorp Vs. Kosamattam Finance NCD – Apr-23 issue – Which is better?

There is no simple answer.

If you go by credit ratings (which can change in future), the order would be Muthoot Finance, Muthoot Fincorp and Kosamattam Finance.

If you go by interest rates, it would be exactly the opposite order (it is obvious).

If you understand the risk factors of investing in NBFC NCD bonds, you can subscribe to any of these bonds.

Have you liked our tips and analysis? Then share it on your Facebook, Twitter, Telegram and other social media which might be useful to your friends too.

Suresh KP

4 comments

  1. Currently a lot of NBFCs and HFCs are coming out with NCD issues. In a rising interest rate scenario, it makes sense to ‘tie’ in the liability side with fixed rate of interest while the asset side is always with variable and rising rate of interest. However, the last RBI decision to maintain status quo in policy rate would probably bring some halt in the issue spree.
    However, there should be a caution as higher interest rates hurt every one in the economy, corporates as well as consumers. It also leaves a scar when the interest rate cycle reverses.

      1. Yes, it is good for NCD investors and that’s why I wrote “for consumers” , means the consumers of loans availed from these finance companies.

Leave a Reply

Your email address will not be published. Required fields are marked *