10% Muthoot Finance Ltd NCD FEB 2019 Public Issue: Details & Review

Muthoot Finance Ltd NCD FEB 2019 Public Issue: Muthoot Finance 2019 NCD Details, Features, Credit Rating, Reasons to Invest, Price, Date, Allotment Status, Listing, Reviews, Status & How to Apply?

Nonconvertible Debentures are those debentures which do not have the option of conversion into shares and on maturity, the principal amount along with the interest is paid to the holder of the instrument.

So, today’s post is regarding the Muthoot finance NCD. Stay tuned till the end to learn about “Muthoot Finance NCD”

Nowadays, Fixed Deposit interest rate proffered by the bank has touched the lower rates which compels the investor to invest in nonconvertible debentures.

Muthoot Finance is all set to propose NCD on 14th February 2019. Muthoot finance has come up with secured NCD’s to the tune of Rs 100 Crores and with an avenue to retain another Rs 650 Cover subscription.

NCDs is also the best option to invest money. The grant is as high as 10% per annum. Such high yield is good compared to low-interest rates offered by banks.

Should you invest in Muthoot Finance NCD’s of Feb-2019 as other fixed income options are offering lowest rates? What are the risk factors one should consider before investing in Muthoot Finance NCD Feb 2019?

Read our post till the end to learn Muthoot finance review.

What are Non-Convertible Debentures?

as you all know there are two kinds of debentures

The convertible debentures are those that can be converted into the equity shares at a later time.

Non-convertible debentures are those which cannot be converted into the equity, can generate higher lucrative returns.

Muthoot Finance Ltd NCD Details

Muthoot Finance NCDMuthoot Finance LTD has announced its 19th series of public issue of secured redeemable non-convertible debentures. The issue is with a base issue size of Rs 100 crores with an option to retain oversubscription up to Rs 650 crores aggregating up to tranche limit of Rs 750 crores (“Tranche I issue”).

The issue has commenced on 14th February 2019 and will be closed on March 14, 2019, with an option to close on such earlier date extended day as may be decided by the board of directors.

Objects of the Issue

The net proceeds raised through the issue will be utilized for the purpose

lending-75%of the amount raised and allocated in the issue

General corporate purpose-25%of the amount raised and alloted in the issue

Muthoot Finance NCD Feb 2019 Public Issue Details

 Issuer  Muthoot Finance Ltd (View Report)
 Issue Size Base Issue of Rs. 1000 million with an option to retain oversubscription upto Rs. 6,500 million aggregating to Rs. 7,500 million.
 Issue  Public Issue by the Company of secured redeemable non‐convertible debentures of face value of Rs. 1,000 each (“NCDs”) for an amount of Rs. 1,000 million (“Base Issue”) with an option to retain oversubscription up to Rs. 6,500 million aggregating upto Rs. 7,500,000 NCDs amounting to Rs. 7,500 million (“Tranche I Issue Limit”) (“Tranche I Issue”) which is within the shelf limit of Rs. 40,000 million and is being offered by way of this Tranche I Prospectus dated February 05, 2019 containing, inter alia, the terms and conditions of this Tranche I Issue (“Tranche I Prospectus”), which should be read together with the Shelf Prospectus dated February 05, 2019 (“ Shelf Prospectus ”) filed with the Registrar of Companies, Kerala and Lakshadweep, the Stock Exchange and the SEBI.
 Rating  “[ICRA ] AA(Stable)“ and “CRISILAA /Stable”
 Issue  opens  Thursday, 14th Feb 2019
 Issue  closes  Thursday, 14th March 2019
 Issue Price  Rs. 1,000 per NCD
 Minimum  Application   Rs. 10,000/- (10 NCDs) across all Series and in multiples of 1 (one) NCD of Rs 1,000/- each thereafter
 Listing  The NCDs are proposed to be listed on BSE.

Interest Rates for Muthoot Finance NCD Feb 2019

SPECIFIC TERMS FOR EACH SERIES OF NCDs
 Series  I II III IV V VI VII VIII IX
Frequency of Interest Payment Monthly* Monthly* Monthly* Annually** Annually** Annually** N.A. N.A. N.A.
Minimum Application  Rs. 10,000/- (10 NCD) across all series collectively
In Multiples of thereafter (`)  1,000/- (1 NCD)
Tenor from Deemed Date of Allotment  24 months  38 months  60 months  24 months  38 months  60 months  24 months  38 months  60 months
Coupon Rate 9.25% 9.50% 9.75% 9.50% 9.75% 10.00% NA NA NA
Effective Yield (per annum) 9.25% 9.50% 9.75% 9.50% 9.75% 10.00% 9.25% 9.50% 9.75%
Mode of payment Through various options available
Amount (Rs./ NCD) on Maturity Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 1,193.56 Rs.1,333.72 Rs. 1,592.2
Put and Call Option N.A
 * With respect to Options where interest is to be paid on a monthly basis, relevant interest will be calculated from the first day till the last date of every month during the tenor of such NCDs, and paid on the first day of every subsequent month. For the first interest payment for NCDs under the monthly options, interest from the Deemed Date of Allotment till the last day of the subsequent month will be clubbed and paid on the first day of the month next to that subsequent month.

** With respect to Options where interest is to be paid on an annual basis, relevant interest will be paid on each anniversary of the Deemed Date of Allotment on the face value of the NCDs. The last interest payment under annual Options will be made at the time of redemption of the NCDs.

***Subject to applicable tax deducted at source, if any
**** Please refer to Schedule A for details pertaining to the cash flows of the Company in accordance with the SEBI circular bearing number CIR/IMD/DF/18/2013 dated October 29, 2013 and CIR/IMD/DF-1/122/2016 dated November 11, 2016.

***** On Options I, II and III, monthly interest payment is not assumed to be reinvested for the purpose of calculation of Effective Yield (per annum).

The Company would allot the Option IV NCDs, as specified in this Tranche I Prospectus to all valid Applications, wherein the Applicants have not indicated their choice of the relevant option of NCDs.

https://www.muthootfinance.com/investors/public-issues

DEBENTURE TRUSTEE

IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17 R Kamani Marg, Ballard Estate, Mumbai

Tel: 022-40807000; Fax: 022-66311776

Email: itsl@idbitrustee.com

ISSUE REGISTRAR

Link Intime India Private Limited C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup(West), Mumbai

Tel: 022-25967878; Fax 022-25960329

Email: bonds.helpdesk@linkintime.co.in

What is the Credit Rating of the Muthoot Finance

The issue is rated by two credit rating Agencies – CRISILNSE -0.89 % Ltd and ICRA Ltd. Both agencies have awarded long term debt rating of ‘AA/Stable’ for the debentures offered under the issue. The rating scale denotes ‘High degree of safety regarding timely servicing of financial obligations and very low credit risk’.

What is the issue break-up?

The Non-convertible debentures have a tenure of 24 months, 38 months and 60 months. it offers coupon rates from 9.25% to 10.00% based on the tenure and the interest payment option.
  • QIB Portion – 20% of the issue
  • Corporate Portion – 20% of the issue
  • High Net Worth Individuals – 30% of the issue
  • Retail Investors – 30% of the issue

How is a Company in Terms of Financials?

Here are the financials of the company

Liquidity is a key factor in ascertaining a company’s financial health. To approximately evaluate the financial health and long term sustainability, a number of financial metrics must be taken into the account.

Please read below

  1. Its revenues grew from Rs 5,747 Crores in FY 2017 to Rs 6,243 Crores in FY2018.
  2. Its profits grew from Rs 1,180 Crores in FY 2017 to Rs 1,720 Crores in FY2018.
  3. Its Gross NPA is at 1.9% as of 30th September 2018.

About Muthoot Finance LTD

Muthoot Finance is the largest gold financing company in India in terms of a loan portfolio. They are one of the leading loan providers for the personal and business purpose that is secured by the gold jewelry, gold loans, primarily to an individual who possess gold jewelry

Muthoot Finance Ltd is headquartered in the southern state of Kerala. In an addition to gold loan business, they provide money transfer services through their branches as sub-agents of various money registered transfer agencies and have commenced collection agency service.

The company also operate three windmills in the state of Tamil Nadu.

As of September 30, 2018, the company has approximately 8.15 Million loan accounts. It has built a strong network of 4,370 branches across 23 states, Delhi and five union territories in India.

Below I have listed the company’s promoter name

  • MG George Muthoot
  • George Alexandre Muthoot
  • George Thomas Muthoot
  • George Jacob Muthoot

Why to Invest?

Every company has its pros and cons

so, below I am listing the valid reasons why you should consider investing in NCD

  • There is no doubt in saying that, Muthoot finance is one of the leading and well-known company in India
  • Lucrative interest rate where one can avail the 10% yield per annum
  • The company enjoys a good credit rating from CRISIL and ICRA
  • The company is issuing secured NCD which are considered safe to invest as compared to the other unsecured NCD

Why not to invest in Muthoot Finance NCD?

  • it is risky to invest in the gold finance company. A decline in gold prices (which happened in the last 1-2 years), can pose a high risk to such business.
  • Though Muthoot finance is offering secured NCDs, there could be a delay in the interest and repayment of principal on maturity.
  • You can refer to all the risk factors in the financial prospectus of the company
  • one of the obvious reason if I could state that is instability of Indian economies and banking sector could affect the liquidity of the company

How to Apply Muthoot Finance NCD Issue of 2019?

You can apply for this NCD through demat. if you have a demat account you can log in to your account go to IPO/NFO/NCD section and apply for the same.

The procedure for applying for non-convertible debentures will be through ASBA Your amount would be blocked initially and upon allotment, your amount would be deducted and NCD allotment would be done, else your amount would be unblocked) You can reach out to any of the lead managers websites to learn more details on how to apply them.

How Muthoot Finance Feb 2019 NCD are taxed?

There would not be any interest on the nonconvertible debentures. It’s immaterial whether the company would deduct TDS or not, one has to declare the interest in their income tax returns and pay income tax based on the individual tax bracket

When this Muthoot Finance NCD of 2019 would get listed on BSE?

These Muthoot finance limited NCD would get listed after the 6 working days from the date of closure.

it would get listed approx on 22nd March 2019 assuming that it would continue till 14th march i.e the last date for the subscription.

If its subscribed earlier and subscription closed, it would get listed after 6 days from such closure

Should you invest in  Muthoot Finance NCD of Feb 2019?

after all, said and done, is it good to invest in Muthoot finance NCD of Feb 2019

To get the answer, you can refer our post in the regard

  1. Though Muthoot finance is offering secured Nonconvertible debentures, we have seen that NBFC companies have delayed the interest payment due to the liquidity crunch. Do you still want to invest in such NCD then?
  2. The tenure for the NCD is 24 months, 38 months and 60 months. do you wish to park your money for 5 years? we do not know how the company would perform in the 5 years, hence you should consider investing for short term non-convertible debentures
  3. Muthoot Finance NCD offers to yield up to 10% interest per annum, however, is high risk. If you have a high-risk appetite, investing in some of the low risk and high return mutual fund may be one of the good investment options that can fetch you 12% to 15% annualized returns.

Moving on to the conclusion

Muthoot finance is all set to propose high-interest NCD for the investors. Secured NCD are somewhat better as compared to the unsecured.

if you are a high-risk taker and willing to invest in such companies even after IL&FS scam, you can consider investing in such companies.

Final Words

Dear Readers,

I hope you had a great time reading about “Muthoot Finance NCD 2019”. if you like it please share it among others via facebook or twitter.

Any views, suggestion are cordially invited to the post.

Readers, do you feel these NCD are worth investing?

Thanks and stay tuned for another update.

Have a great day ahead.

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