Kosamattam Finance is coming up with secured NCD bonds now. These bonds open for subscription on 14th December, 2022. Kosamattam Finance is a leading NBFC company in India. The NCD interest rates for Kosamattam Finance NCD are up to 9.5% and yield is up to 9.92%. These NCDs are offered for 18 months to 88 months tenure. These interests are paid either monthly or on maturity. Should you invest in Kosamattam Finance NCD issue in December, 2022?
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About Kosamattam Finance Limited
Company is a systemically important non-deposit taking NBFC primarily engaged in the gold loan business, lending money against the pledge of household, jewelry in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat and Telangana along with the Union Territory of Puducherry.
Kosamattam Finance NCD December, 2022 โ Issue Details
Subscription opens on 14-Dec-2022
Subscription closes on 10-Jan-2023
NCDโs are available in 8 different options. The tenures for these NCDs are for 18 months, 24 months, 30 months, 36 months, 39 months, 48 months, 54 months and 88 months tenure.
Coupon interest rates are same for all investors and these are between 8.25% to 9.5%. ย Yield on these NCD bonds works out up to 9.92% which is highest.
These are secured NCDs.
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.
NRIโs cannot apply to this NCD subscription.
The base issue size for December 2022 NCD issue is Rs 200 Crores with an option to retain over subscription up to Rs 200 Crores totaling to Rs 400 Crores.
SMC Capitals is the lead manager for the issue.
Kosamattam Finance December, 2022 NCD Prospectus Link
Kosamattam Finance NCD โ December-22 Interest rates
| Options | Frequency of Interest Payment | Tenor in months | Coupon Rate (Retail) | Effective Yield (% per Annum) | Amount on Maturity (Rs) |
|---|---|---|---|---|---|
| I | Cumulative | 18 | NA | 8.00% | 1,122 |
| II | Monthly | 24 | 8.25% | 8.57% | 1,000 |
| III | Cumulative | 30 | NA | 8.49% | 1,226 |
| IV | Monthly | 36 | 9.00% | 9.38% | 1,000 |
| V | Cumulative | 39 | NA | 9.25% | 1,333 |
| VI | Monthly | 48 | 9.50% | 9.92% | 1,000 |
| VII | Cumulative | 54 | NA | 9.43% | 1,500 |
| VIII | Cumulative | 88 | NA | 9.91% | 2,000 |
What are the credit ratings for these NCDs?
These NCDs have been rated as IND A-/Stable by India Ratings which indicate that instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
How is the company doing in terms of profits?
Here are the details of the profits of the company.
Year ending Mar-2019 โ Rs 43.14 Crores
Year ending Mar-2020 โ Rs 47.63 Crores
Year ending Mar-2021 โ Rs 65.31 Crores
Year ending Mar-2022 โ Rs 79.99 Crores
Why to invest in these NCDs?
1) These Kosamattam NCDs offer attractive interest rates where investors can get interest up to 9.5% per annum and yield up to 9.92%.
2) Kosamattam Finance generates consistent margins. This means that the company has ability to pay interest payment on time to its NCD holders without any delay.
3) It issues secured NCDs. These NCDs are safe compared to any other unsecured NCDs. In case a company gets wind-up/shut down for some reason, 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.
4) Company has credit rating of A-/Stable from India Ratings. Such ratings are considered to have low credit risk.
Why not to invest in these NCDs?
1) The company has a credit rating of A-/Stable from India Ratings. However, the credit ratings were BBB till 9 months back. Bonds that have a credit rating with below A grade are considered as very high risk.
2) Covid pandemic has significant effect on the company operations and it may impact in future too.
3) Such NBFC companies are subject to RBI inspection and any adverse action can affect the business.
4) 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.
Also Read: This Mutual Fund gave 20% SIP Returns in Last 20 Years
Should you invest in Kosamattam Finance NCDโs?
These NCDs offer high interest rates up to 9.5% and yield works out to 9.92%. Company has good credit rating of A-/Stable from India Ratings.
On other hand, some of the small finance banks are offering up to 8% interest rates which are covered under DICGC too up to Rs 5 lacs.Till 9 months back, credit ratings were low at BBB from BWR Ratings and these are upgraded to A-/Stable now through India Ratings.
Like I always indicated earlier, investors should invest in A / AA / AAA rated NCD bonds which are little safe compared to low credit rating bonds. Since these are upgraded from BBB rating to A rated bonds, one should relook at this aspect too before jumping.
Investors who understand both pros and cons indicated above and willing to take the risk can invest in such NCDs.
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Which are the Mutual funds which give a high returns
Also India Bonds is it safe to invest in them, as they high returns also since govt of India gives a coverage of 5 lacs per account , how can I secure the risk with Insurance, is it possible.
What is the best way to secure a monthly income with an investment of 20lacs, which I am likely to get from sale of my property
Rating upgrade from BBB to A-(Stable) has been done only recently, therefore, one can avoid such kind of NCD issues.