Muthoot Fincorp NCD – Jan-2022 – Issue Details and Review
Trivandrum based Muthoot Fincorp has come up with secured NCD bonds. The NCD Issue that would open for subscription on 5th January, 2022. Muthoot Fincorp Limited is leading NBFC company which has emerged as a prominent gold loan player in India. Muthoot Fincorp offers interest rates are up to 9% and yield works out to be 9.37%. These NCD’s are issued in 10 different series and for 27 months to 72 month tenure. Investors can get fixed income, either monthly or on maturity depending on the option chosen. This article provides Muthoot Fincorp NCD review – January, 2022 issue along with risk factors in such NCDs.
About Muthoot Fincorp Limited
They are a non-deposit taking systemically important NBFC in India. The company emerged as a prominent gold loan player with 75% growth in its gold loan portfolio to Rs 39,700 lakhs in FY 2011.
From FY 2014 to FY 2019, the company has shown a significant increase in its gold loan portfolio at a compound annual growth of around 13%.
Muthoot Fincorp NCD – Jan-22 Issue Details
Muthoot Fincorp NCD opens on Wednesday, 5th January, 2022 and closes on Friday, 28th January, 2022.
NCD’s are available in 10 options. It offers NCD bonds for 27 months to 72 month tenure.
Coupon interest rates are between 8% to 9%. The yield ranges between 8.3% to 9.37%.
They are issuing secured redeemable NCDs as part of this issue.
Interest payable monthly and 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. Hence, these are liquid investments.
NRI’s cannot apply to this NCD subscription.
The base issue size is Rs 200 Crores with an option to retain over subscription up to Rs 200 Crores totaling to Rs 400 Crores.
This NCD issue security symbol is MFINCORP11.
SMC Capitals Limited is the lead manager for this NCD issue.
Muthoot Fincorp NCD Jan-22 Prospectus
What are Muthoot Fincorp NCD Interest Rates?
What are the Muthoot Fincorp NCD ratings?
The Jan-2022 NCDs have been rated as A+ Stable by CRISIL indicate that instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry a low credit risk.
When these NCD bonds would be listed on stock exchanges?
The NCDs are proposed to be listed on BSE. The NCDs shall be listed within 6 working days from the date of the issue closure.
How is the company doing in terms of profits?
Its consolidated profits are as below:
Year ended Mar-2019 – Rs 372.6 Crores
Year ended Mar-2020 – 257.9 Crores
Year ended Mar-2021 – 397.2 Crores
Why to invest in Muthoot Fincorp NCD’s?
1) Company is earning consistent margins in the last few years. This indicates that this company has ability to consistently pay the interest rates for its NCD holders or payments to creditors.
3) These NCDs offer attractive interest rates where investors can get interest up to 9% and yield up to 9.37%.
4) It issues secured NCDs. In 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 NCD options.
Why not to invest in Muthoot Fincorp NCD?
Here are the risk factors of investing in these non-convertible debenture bonds.
1) Covid-19 pandemic is still uncertain and can impact company operations and financial condition in the future too.
2) 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 its business.
3) Company credit profile may take an impact because of real estate property acquisition since such acquisition brings real estate risks.
4) Company business requires substantial capital, any disruption in funding sources can have an impact on company business.
5) Company financial performance is particularly vulnerable to interest rate risk.
6) Refer prospectus for complete risk factors.
Should you invest in Muthoot Fincorp NCD Jan-22 issue?
Muthoot Fincorp offers secured NCDs in January, 2022 issue. These NCDs offers high interest rate up to 9% and yield works out to be 9.37%. These NCDs have good credit rating of A+ by CRISIL. One should understand the risks involved in investing in NCD bonds of NBFC companies. DHFL defaulted NCD payments earlier. SREI delays the repayment of NCD capital and interest payment, even in 2021. These are a few examples. High-risk investors can invest in these NCD bonds after understanding all these risk factors.
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