Updated: September 6, 2023
Kosamattam Finance is currently devising a secured NCD bond. These bonds will begin offering on September 8, 2023. Kosamattam Finance is a leading NBFC company in India. Kosamattam Finance NCD has an NCD interest rate of up to 10% and a yield of up to 10.47%. These NCDs have tenures ranging from 20 months to 88 months. These interest are paid monthly or at maturity. Should I invest in Kosamattam Finance NCD which will be issued in September 2023?
Also read: Indiables Mortgage NCD – September 2023 – Should You Invest Or Avoid?
About Kosamattam Finance Limited
The Company is a systemically important non-deposit-taking NBFC primarily engaged in the gold loan business in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi, Maharashtra, Gujarat and Telangana. The state lends money based on household and jewelry covenants. United Territory of Pondicherry.
Kosamattam Finance NCD September 2023 – Issue Details
| Subscription start date | September 8, 23 |
| subscription end date | September 22, 23 |
| Issued security name | Kosamattam Finance Limited |
| Security type | Safe, Redeemable and Non-Redeemable NCDs |
| issue size (base) | 100 million rupees |
| Publish size (option to keep beyond subscription) | 100 million rupees |
| total issue size | 200 million rupees |
| issue price | 1,000 rupees per security deposit |
| face value | 1,000 rupees per security deposit |
| series | I-VIII |
| Minimum lot size | 10 bonds and then 1 bond |
| tenure | 24-96 months |
| Interest payment frequency | monthly and maturity |
| listing | Within 6 business days for BSE |
| chief manager | SMC Capitals Co., Ltd. |
| bond trustee | VISTRA ITCL (India) LIMITED |
These are assigned on a first-come, first-served basis. Therefore, the issue may end before this date if pre-orders flood in before the end date.
NRI cannot be applied to this NCD subscription.
Kosamattam Finance NCD – Interest Rates on 22 Sep
| series | I | Ⅱ | Ⅲ | Ⅳ | V. | VI | VII | VIII |
|---|---|---|---|---|---|---|---|---|
| Interest payment frequency | Cumulative | monthly | Cumulative | monthly | Cumulative | monthly | Cumulative | Cumulative |
| Tenure (months) | 20 | twenty four | 30 | 36 | 39 | 48 | 54 | 88 |
| Coupon (annual %) | NAMore | 8.75% | NAMore | 9.25% | NAMore | 10.00% | NAMore | NAMore |
| Effective yield (%/year) | 8.52% | 9.11% | 8.85% | 9.65% | 9.25% | 10.47% | 9.43% | 9.91% |
| Amount at maturity (Rs.) | 1146.00 | 1000.00 | 1236.00 | 1000.00 | 1333.00 | 1000.00 | 1500.00 | 2000.00 |
What is the credit rating of these NCDs?
These NCDs are rated IND A-/Stable by India Ratings, indicating that products with this rating are considered to provide adequate security with respect to the timely repayment of their financial obligations. The credit risk of such instruments is low.
What about company profits?
Details of the company’s earnings are as follows:
- Year ended March 2019 – Rs 431.4 billion
- Year ended March 2020 – Rs 476.3 billion
- Year ending March 2021 – Rs 653.1 billion
- Year ending March 2023 – Rs 799.9 billion
Why invest in these NCDs?
- These Kosamattam NCDs offer attractive interest rates where investors can earn up to 10% interest and yields up to 10.47% per annum.
- Kosamattam Finance produces stable profits. This means the company has the ability to timely pay interest to his NCD holders without delay.
- Issue a secure NCD. These NCDs are safe compared to other unsafe NCDs. If the company goes out of business for any reason, the secured NCD investors will have priority to repay the company’s asset-backed capital with interest. Therefore, it is safe to invest in such a secure NCD option.
- The company has an A-/Stable credit rating from India Ratings. Such ratings are considered to have low credit risk.
Want to invest in these NCDs?
- The company has an A-/Stable credit rating from India Ratings. However, until last year the credit rating was BBB. Bonds with a credit rating below A grade are considered very risky.
- The COVID-19 pandemic has had a significant impact on corporate operations, and may impact them in the future.
- Such NBFC companies are subject to RBI inspection and any adverse conduct may affect their business.
- See prospectus for full risk factors.
How can I invest in these NCDs?
This issue is only available in demat format. You can apply online or through the website of the broker who maintains the demat account. Applications can be downloaded from the lead manager’s website. See prospectus for details.
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Should I invest in Kosamattam Finance NCD in September 2023?
- These NCDs offer high interest rates of up to 10%, yielding a yield of 10.47%. The company has a good credit rating of A-/Stable from India Ratings.
- On the other hand, some microfinance banks offer interest rates subject to DICGC up to 8.5% up to Rs 5 rupees. Until last year, the credit rating was BBB by BWR rating These have been upgraded to A-/Stable through India’s rating.
- As I always pointed out earlier, investors should invest in A/AA/AAA rated NCD bonds, which are less safe than bonds with lower credit ratings. These bonds will be upgraded from his BBB rating to his A rated bonds, so you should also reconsider this before jumping in.
- Investors who understand both the above advantages and disadvantages and who are willing to take risks can invest in such NCDs.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and he is a NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
