Muthoot Fincorp Secured NCD Bonds Tranche III would open for subscription on January 12, 2024. Muthoot Fincorp Limited is a leading NBFC company which has emerged as a prominent gold loan player in India. It offers interest rates up to 9.75%. These NCD’s are issued in 10 different series and for 24 months to 96 months tenure. Interest is paid either monthly, Annual or cumulative depending on the option chosen. Should you invest in Muthoot Fincorp NCD’s of January, 2024 issue series? What are the risk factors one should consider before investing in such high risk NCDs?
About Muthoot Fincorp Limited
They are, a non-deposit taking, systemically important NBFC registered with the RBI.
Company is one of the prominent gold loan players in the Indian market. The personal and business loans secured by gold jewelry and ornaments offered by the Company are structured to serve the business and personal purposes of individuals who do not have ready or timely access to formal credit or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements.
Muthoot Fincorp NCD – Jan-2024 Issue Details
| Subscription opening Date | 12-Jan-24 |
| Subscription closure Date | 25-Jan-24 |
| Issuing Security Name | Muthoot Fincorp Limited |
| Security Type | Secured, Redeemable and Non-Convertible NCDs |
| Issue Size (Base) | Rs 75 Crores |
| Issue Size (Option to retain over subscription) | Rs 150 Crores |
| Total issue size | Rs 225 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | I to X |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 24, 36, 60 and 96 Months |
| Interest Payment frequency | Monthly, Annual and Cumulative |
| Listing on | Within 6 working days on BSE |
| Lead Manager | SMC Capitals Limited |
| Debenture Trustee/s | Vardhman Trusteeship Private Limited |
Muthoot Fincorp NCD Jan-2024 Prospectus link
What are Muthoot Fincorp NCD – Jan-2024 Interest Rates?
| Series | I | II | III | IV | V | VI | VII | VIII | IX | X |
|---|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Monthly | Monthly | Annual | Annual | Annual | Cumulative | Cumulative | Cumulative | Cumulative |
| Tenure (months) | 24 | 36 | 60 | 24 | 36 | 60 | 24 | 36 | 60 | 96 |
| Coupon (% per Annum) | 8.90% | 9.15% | 9.35% | 9.25% | 9.50% | 9.75% | NA | NA | NA | NA |
| Effective Yield (% per Annum) | 9.26% | 9.53% | 9.75% | 9.25% | 9.50% | 9.75% | 9.25% | 9.50% | 9.75% | 9.05% |
| Amount on Maturity (In Rs.) | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,194 | 1,313 | 1,592 | 2,001 |
What are the Muthoot Fincorp NCD – Jan-2024 ratings?
These secured NCD’s are rated as AA-/Stable by CRISIL 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 as below:
- Year ended Mar-2019 – 372.6 Crores
- Year ended Mar-2020 – 257.9 Crores
- Year ended Mar-2021 – 397.2 Crores
- Year ended Mar-2022 – 412.55 Crores
- Year ended Mar-2023 – 646.42 Crores
Why to invest in Muthoot Fincorp NCD – Jan-2024?
- These NCDs offer high interest rates, which range between 8.9% to 9.75% and yield between 9.25% to 9.75%.
- 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. This indicates that this company has ability to consistently pay the interest amount for its NCD holders or payments to its creditors.
Why not to invest in Muthoot Fincorp NCD – Jan-2024?
Here are the risk factors of investing in these non-convertible debenture bonds.
- The Company has been subject to RBI inspections and any adverse action taken could affect the business and operations of the company.
- Company business requires substantial capital, any disruption in funding sources can have an impact on company business.
- Company financial performance is particularly vulnerable to interest rate risk.
- Refer prospectus for complete risk factors.
Should you invest in Muthoot Fincorp NCD Jan-2024 issue?
- Muthoot Fincorp offers secured NCDs in January, 2024 issue. These NCDs offer high interest rate up to 9.75%. These NCDs have good credit rating of AA-/Stable by CRISIL.
- On the other side, one should understand the risks involved in investing in NCD bonds of NBFC companies. In the past, NBFC companies has been delaying the payment of interest and repayment of capital.
High-risk investors can invest in these NCD bonds after understanding all these risk factors.
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