Muthoot Fincorp Secured NCD Bonds would open for subscription on 1st September, 2023. 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 9.44%. 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 September, 2023? What are the risk factors one should consider before investing in such high risk NCDs?
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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 jewellery 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.
The Gold loan portfolio of the company as of March 31, 2023 comprised approximately 31.40 lakhs loan accounts. As of March 31, 2023 it operated out of 3,619 branches located across 24 states, including the union territory of Andaman and Nicobar Islands and the national capital territory of Delhi and employed 18509 employees including 138 contracted experts in its operations.
Muthoot Fincorp NCD – Sep-2023 Issue Details
| Subscription opening Date | 01-Sep-23 |
| Subscription closure Date | 14-Sep-23 |
| Issuing Security Name | Muthoot Fincorp Limited |
| Security Type | Secured, Redeemable and Non-Convertible NCDs |
| Issue Size (Base) | Rs 100 Crores |
| Issue Size (Option to retain over subscription) | Rs 300 Crores |
| Total issue size | Rs 400 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 to 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 |
NRI’s cannot apply to this NCD subscription.
Muthoot Fincorp NCD Aug/Sep-2023 Prospectus link
What are Muthoot Fincorp NCD 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) | 8.65% | 8.90% | 9.05% | 9.00% | 9.27% | 9.44% | NA | NA | NA | NA |
| Effective Yield (% per Annum) | 8.99% | 9.26% | 9.43% | 8.99% | 9.26% | 9.43% | 8.99% | 9.26% | 9.43% | 9.05% |
| Amount on Maturity (In Rs.) | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,000 | 1,188 | 1,305 | 1,570 | 2,001 |
What are the Muthoot Fincorp NCD 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?
- These NCDs offer high interest rates, which range between 8.65% to 9.44% and yield between 8.99% to 9.43%.
- 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?
Here are the risk factors of investing in these non-convertible debenture bonds.
- 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 our business, results of operations and financial condition.
- 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.
Also Read: Top Government Saving Schemes in India
Should you invest in Muthoot Fincorp NCD Sep-2023 issue?
Muthoot Fincorp offers secured NCDs in September, 2023 issue. These NCDs offers high interest rate up to 9.44%. 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. Two classic examples – DHFL has defaulted NCD payments earlier and SREI has been delaying repayment of NCD capital and interest payments.
High-risk investors can invest in these NCD bonds after understanding all these risk factors.
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