Muthoottu Mini NCD – August 2021 – Review
Muthoottu Mini Financiers is coming up with secured and unsecured NCD bonds now. These NCD bonds would open for subscription on 18th August, 2021. Muthoottu Mini Financiers is a leading NBFC company in India which is focused on providing loans against household gold jewelry. The interest rates for Muthoottu Mini Financiers NCD are up to 10% and yield is up to 10.47%. These NCDs are offered for 480 days to 84 months tenure. These interests are paid either monthly or on maturity. Should you invest in Muthoottu Mini NCD August, 2021? What are the risk factors one should consider before investing in such high risk NCD?
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About Muthoottu Mini Financiers Limited
They are a non-deposit taking systemically important NBFC in the gold loan sector lending money against the pledge of household gold jewelry in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry.
Muthoottu Mini NCD – August 2021 Issue Details
Subscription opens on 18-August-2021
Subscription closes on 9-September-2021
These NCD’s are available in 7 different options. The tenure for these NCDs are for 480 days, 24 months, 42 months, 50 months, 66 months and 84 months.
Coupon interest rates are between 8.75% to 10%. Yield on these NCD bonds works out up to 10.47% which is highest.
It issues secured NCDs + unsecured NCDs. Its unsecured NCDs are for 66 months + 84 months tenure.
Interest is payable monthly or on maturity depending on the option chosen by the NCD investor.
The face value of the NCD bond is Rs 1000.
Minimum investment is for the 10 bonds. Means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
These NCD bonds would be listed on BSE within 6 working days from the issue closure date. Hence these are somewhat liquid investments.
These are allotted on first come first serve basis. Hence the issue can be closed before this date if it is oversubscribed before the closure date.
NRI’s cannot apply to this NCD subscription.
The base issue size for August 2021 NCD issue is Rs 125 Crores with an option to retain over subscription up to Rs 125 Crores totaling to Rs 250 Crores. Secured NCDs would be issued to the tune of Rs 200 Crores and unsecured NCDs for the balance of Rs 50 Crores.
Vivro Financial Services Pvt Limited is the lead manager for this NCD issue.
Muthoottu Mini Financiers August 2021 NCD Prospectus
Interest rates of Muthoottu Mini Financiers August 2021 NCD
What are the credit ratings for these NCDs?
These NCDs have been rated as CARE BBB+: Stable by CARE which indicate that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk
How is the company doing in terms of profits?
Here are the details of profits of the company.
Year ending Mar-2020 – Rs 33.5 Crores
Year ending Mar-2021 – Rs 31.9 Crores
Why to invest in these NCDs?
1) These Muthoottu Mini Financiers NCDs offer attractive interest rates where investors can get interest up to 10% per annum and yield up to 10.47%.
2) Muthoottu Mini Financiers generates consistent margins. This means that company has ability to pay interest payment on time to its NCD holders without any delay.
3) It issues secured and unsecured NCDs. Its secured NCDs are safe compared to unsecured NCDs. In case company gets into financial crisis and wind-up/shut down, secured 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 such secured NCD options.
Why not to invest in these NCDs?
1) The company has a credit rating of BBB+ from CARE Ratings. Bonds that have a credit rating with below A grade are considered as very high risk.
2) The impact of Covid-19 pandemic on its business is uncertain and cannot be predicted.
3) Refer prospectus for complete risk factors.
How to subscribe to these NCDs?
This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.
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Should you invest in Muthoottu Mini NCD in August 2021?
Muthoottu Mini Financiers NCD offer high interest rates and yield. Banks are offering low interest rates, hence investors would get tempted with such high interest rate NCDs from Muthoottu Mini Financiers. These NCDs are rated as BBB+: Stable by CARE Ratings which are low. Such credit ratings may further fall in future. One should always invest in AAA rated NCDs. It issues both secured NCDs and unsecured NCDs. Its secured NCDs are safe compared to unsecured NCDs. Investors who are willing to take the risks, can invest in secured NCDs, else avoid.
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Sir, I want to invest Rs 3000000 in one account for 66 month monthly option , is it possible. Is it safe for me?
Arshad, There is no straight YES/NO answer. Read the risk factors indicated in the article which can help you to take the decision.
While 9.7% Edelweiss August 2021 NCD is having a rating of A+(negative) by ICRA offering 9.15% (monthly payout) for 60 months tenure; Muthoottu Mini Financiers having BBB+ rating from offering CARE offering 9.50% for 42 months (monthly payout). Edelweiss is a big entity as such, but, Muthoottu being in gold loan business therefore we are presuming that the NCDs are having gold as security (secured NCDs).
I agree..though decision. is it good to invest 50-50 in both scheme? I want to invest 2 Lac.
Edelweiss – Series 5
Muthoottu – Series 4
Your suggestion is much appreciated.
If given a choice among these two, I would prefer to go for A rated bonds instead BBB rated bonds. Yes both are NBFCs and there is risk element.