Muthoot Mercantile NCD Aug-2024 – Introduction
Muthoot Mercantile Limited is coming up with secured NCD bonds that will open for subscription on August 23, 2024. Muthoot Mercantile is an NBFC company in India that offers loans against gold and investments and also provides unsecured loans. The interest rates offered are up to 11.5%. This article will provide some insights into Muthoot Mercantile NCD for Aug-2024, including issue details, dates, and review.
About Muthoot Mercantile Limited
Muthoot Mercantile Limited is a non-deposit taking non-banking financial company registered with the RBI, primarily operating in the gold loan sector. Established in 1939, the company has a rich history rooted in small-scale money lending against household and used gold jewellery. Over 84 years, it has expanded its operations, with a focus on providing immediate funds to retail customers who lack access to formal credit. With 242 branches across nine states and union territories in India, including Kerala, Tamil Nadu, Maharashtra, and Delhi, the company serves as a crucial point of contact for loan origination, disbursement, and collection processes.
Headquartered in Kerala, Muthoot Mercantile Limited has evolved from its humble beginnings in Thiruvananthapuram to become a prominent player in the gold loan industry. Muthoot Mercantile Limited offers a range of Gold Loan schemes tailored to meet the diverse needs of its customers, who are primarily individuals from rural, semi-urban, and metro areas seeking funds for various purposes such as social obligations, emergencies, agriculture-related activities, small-scale business operations, or consumption purposes.
Muthoot Mercantile NCD Aug-2024 issue Details
| Subscription opening Date | 23-Aug-24 |
| Subscription closure Date | 05-Sep-24 |
| Issuing Security Name | Muthoot Mercantile Limited |
| Security Type | Secured, Redeemable, Non-Convertible Debentures (Secured NCDs) |
| Issue Size (Base) | Rs 75 Crores |
| Issue Size (Option to retain over subscription) | Rs 75 Crores |
| Total issue size | Rs 150 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | Series I to IX |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 400 days, 20, 36,60 and 73 Months |
| Interest Payment frequency | Monthly and Cumulative |
| Listing on | Within 6 working days on BSE |
| Lead Manager | Vivro Financial Services Private Limited |
| Debenture Trustee/s | Mitcon Credentia Trusteeship Services Limited |
Muthoot Mercantile NCD Aug-2024 – Interest Rates
| Series | I | II | III | IV | V | VI | VII | VIII | IX |
|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Cumulative | Cumulative | Cumulative | Monthly | Cumulative | Monthly | Cumulative | Cumulative |
| Tenure (Months) | 400 Days | 400 Days | 20 | 20 | 36 | 36 | 60 | 60 | 73 |
| Coupon (% per Annum) | 10.70% | NA | 10.80% | NA | 11.25% | NA | 11.50% | NA | NA |
| Effective Yield (% per Annum) | 11.24% | 10.80% | 11.35% | 10.77% | 11.85% | 11.08% | 12.13% | 11.03% | 12.07% |
| Amount on Maturity (In Rs.) | 1,000.00 | 1,118.95 | 1,000.00 | 1,185.83 | 1,000.00 | 1,370.50 | 1,000.00 | 1,687.50 | 2,000.00 |
Financials of Muthoot Mercantile Limited
| Period Ended | 31-Mar-21 | 31-Mar-22 | 31-Mar-23 | 31-Mar-24 |
|---|---|---|---|---|
| Assets | 316.2 | 420.4 | 606.5 | – |
| Revenue | 49.4 | 67.0 | 94.7 | 131.7 |
| Profit After Tax | 14.0 | 17.0 | 17.7 | 25.1 |
| Net Worth | 100.4 | 117.4 | 135.6 | – |
*Amounts in Crores
Muthoot Mercantile NCD Aug-2024 – Why should you invest?
- The company has consistently shown margin growth in the past. Investors should consider investing in a company with a consistent growth record.
- It has a strong brand name and a track record in India with a long operating history. It offers flexible loan schemes, high-quality customer service, and a short response time. These positive factors help the company grow, which can benefit investors through share price appreciation as well as instill trust for NCD investors and other creditors.
- It offers a high-interest rate of up to 11.5%.
- The company offers secured NCDs. In case the company faces a financial crisis and winds up for some reason, secured NCD investors would receive preference in the repayment of the capital.
Muthoot Mercantile NCD Aug-2024 – Risk Factors
- Company has a low credit rating of BBB/Stable from India Ratings and Research Limited which poses high risk.
- Company is subject to certain restrictive covenants in its loan documents and other debts, which may restrict its operations and ability to grow and may adversely affect its business.
- Its ability to access capital also depends on its credit ratings. Any downgrade in its credit ratings would increase borrowing costs.
- Company, its Promoters and Directors are subject to certain legal proceedings and any adverse decision in such proceedings may have a material adverse effect on its business, financial condition and results of operations.
- A part of its branch network is concentrated in Kerala, Maharashtra and Odisha, and they derive majority of its revenue from these states. Any breakdown of services in these areas could have a material and adverse effect on its results of operations and financial conditions.
- Its financial performance is primarily dependent on interest rate risk. If they are unable to manage interest rate risk in the future it could have an adverse effect on its net interest margin, thereby adversely affecting business and financial condition of the Company.
- Investing in NBFC NCD bonds turned riskier in the past as there were defaults and delays in the payment of interest and repayment of capital by several NBFC companies. Investors should go through Muthoot Mercantile NCD Aug-24 RHP for all risk factors.
Muthoot Mercantile NCD Aug-2024 – Should you invest or avoid?
Muthoot Mercantile Ltd is an NBFC engaged in lending loans against Gold, Investments, Health Insurance, Forex Services, and Money Transfer. Its Aug-2024 NCD issue comes with attractive interest rates. The company has consistent growth in margins. In this issue, they are offering secured NCDs, which are somewhat safer compared to unsecured NCDs.
On the negative side, the company has a low credit rating of IND/BBB Stable from India Ratings. The company derives the majority of its revenues from 3 states, posing a regional risk. Investors should not forget about NCD defaults and delays in the payment of interest/principal from NBFC companies in the past.
Investors need to review both pros and cons before investing in such NCD bonds.
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Detailed information Suresh ji, thanks.
Thank you