10.5% Muthoot Mercantile NCD December 2023 – Issue Details and Review

Muthoot Mercantile NCD December 2023 – Introduction

Muthoot Mercantile Limited is coming up with secured NCD bonds that will open for subscription on December 4, 2023. Muthoot Mercentile 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 10.5%. This article will provide some insights into Muthoot Mercantile NCD for December 2023, including issue details, dates, and reviews.

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About Muthoot Mercantile Limited

The company is a non-deposit-taking non-banking financial company primarily engaged in the gold loan sector, lending money against the pledge of household and/or used gold jewelry primarily to retail customers who do not have access to formal credit on an immediate basis.

It is also engaged in providing unsecured loans to individual customers.

As of August 31, 2023, the company has disbursed gold loans and unsecured loans to its customers from a network of 224 branches in 8 states and union territories, namely Tamil Nadu, Kerala, Haryana, Maharashtra, Madhya Pradesh, Orissa, Punjab, Uttar Pradesh, and Delhi.

As of August 31, 2023, the company employs 722 persons in its operations.

This company is not associated with Muthoot Finance nor Muthoot Fincorp which already floated several NCD bonds in the past.

Muthoot Mercantile NCD December 2023 – Issue Details and Review

Muthoot Mercantile NCD December 2023 issue Details

Subscription opening Date 04-Dec-23
Subscription closure Date 15-Dec-23
Issuing Security Name Muthoot Mercantile Limited
Security Type Secured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base) Rs 100 Crores
Issue Size (Option to retain over subscription) Rs 100 Crores
Total issue size Rs 200 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Series I to XI
Minimum Lot size 10 bonds and 1 bond there after
Tenure 367 days, 18, 24, 36, 60, 75 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 December 2023- Interest Rates

Series I II III IV V VI VII VIII IX X XI
Frequency of Interest Payment Monthly Cumulative Monthly Cumulative Monthly Cumulative Monthly Cumulative Monthly Cumulative Cumulative
Tenure (Months) 367 Days 367 Days 18 18 24 24 36 36 60 60 75
Coupon (% per Annum) 9.50% NA 9.65% NA 9.75% NA 10.25% NA 10.50% NA NA
Effective Yield (% per Annum) 9.92% 9.75% 10.09% 9.77% 10.20% 9.77% 10.75% 10.18% 11.02% 9.61% 11.73%
Amount on Maturity (In Rs.) 1,000 1,098 1,000 1,150 1,000 1,205 1,000 1,338 1,000 1,583 2,000

Financials of Muthoot Mercantile Limited

Period Ended 31-Mar-21 31-Mar-22 31-Mar-23 31-Aug-23
Assets 420.4 316.2 606.5 631.6
Revenue 49.4 67.0 94.7 46.5
Profit After Tax 14.0 17.0 18.2 8.9

Muthoot Mercantile NCD December 2023 – Reasons to 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 10.5%.
  • 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.

Also Read: 10.5% ICL Merchantile NCD Nov -2023 issue details

Muthoot Mercantile NCD December 2023 – Risk Factors

  • Company has low credit rating of BBB/Stable from India Ratings and Research Limited.
  • The “Muthoot” mark has been registered as a trademark by M. Mathews, Chairman of the company. Furthermore, an application was filed by Thomas Muthoot, Thomas John Muthoot, and Thomas George Muthoot before the Intellectual Property Appellate Board, Chennai, on July 3, 2012, for the removal, expungement, rectification, cancellation, and variation of the trademark. Subsequently, the application was transferred to the Intellectual Property Division of the High Court of Judicature at Madras and is currently pending. Any damage to the brand or its reputation may adversely affect the company.
  • The 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 and constrain its access to capital and lending markets, thus negatively affecting net interest margin and business.
  • A part of its branch network is concentrated in Kerala and Maharashtra, and it derives the majority of its revenue from these states. Any breakdown of services in these areas could have a material and adverse effect on the company’s business.
  • Its business is capital-intensive, and any disruption or restrictions in raising financial resources could have a material adverse effect on its liquidity and financial condition.
  • 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. Investors should go through Muthoot Mercantile NCD risk factors in RHP.

Muthoot Mercantile NCD December 2023 – 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 December 2023 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 two 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.

4 comments

  1. Hello. Excellent post. Can you help me with NCD investing. Is there any site where we can apply NCD? I have bank of baroda account but they only list very limited no. Of companies to subscribtion. I recently open account on golden pi but no luck..
    If possible then do suggest website where we can apply all NCD issues.
    Thank you!

    1. Aditya, You need to have demat account to purchase any of these upcoming NCDs or NCDs that are listed on stock exchanges. I would recommend you to open a demat account of your choice and then invest as and when these come after considering the risk factors. In your demat account you can view all NCDs irrespective of the company. Once you invest, you can also see your holdings and sell them on stock exchanges before maturity at the price that is being traded

  2. Hi Suresh,

    I am regular reader of your posts. I have SERI secured NCD’s, recently they paid partial interest. Do you have any idea of SERI full repayment ?

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