Muthoot Mercantile NCD August 2024 – Overview
Muthoot Mercantile Limited will be issuing secured NCD bonds which will commence subscription on 23rd August 2024. Muthoot Mercantile is an Indian NBFC company that offers gold and investment secured loans as well as unsecured loans. Interest rates offered are up to 11.5%. In this article, Muthoot Mercantile NCD August 2024Includes issue details, dates, reviews, etc.
About Muthoot Mercantile Limited
Muthoot Mercantile Limited is a non-deposit taking non-banking finance company registered with the Reserve Bank of India, operating primarily in the gold lending sector. Founded in 1939, the company has a rich history rooted in small-scale gold lending secured against household goods and second-hand gold jewellery. Over 84 years, the company has expanded its operations, focusing on providing instant funds to retail customers who do not have access to formal credit. With 242 branches across nine states and union territories of India, including Kerala, Tamil Nadu, Maharashtra and Delhi, the company acts as a key contact point in the loan origination, disbursement and recovery process.
Headquartered in Kerala, Muthoot Mercantile Limited has grown from humble beginnings in Thiruvananthapuram to become a leading player in the gold loan industry. Muthoot Mercantile Limited caters to individuals across rural, semi-urban and metropolitan areas who require funds for various purposes including social obligations, emergency situations, agri-business activities, small business operations, consumption purposes etc. Muthoot Mercantile Limited offers a range of gold loan schemes customized to meet the diverse needs of its customers.
Muthoot Mercantile NCD August 2024 Issue Details
| Application start date | August 23, 2024 |
| Subscription End Date | September 5, 2024 |
| Name of Issuer | Muthoot Mercantile Limited |
| Security Type | Secured Redeemable Non-Convertible Debentures (Secured NCDs) |
| Issue size (base) | 75 million rupees |
| Issue size (option to hold oversubscribed amounts) | 75 million rupees |
| Total Issue Amount | 150 crore |
| Issue price | 1,000 per bond. |
| Face value | 1,000 per bond. |
| series | Series I to IX |
| Minimum Lot Size | 10 bonds and then 1 bond |
| Tenure | 400 days, 20, 36, 60, 73 months |
| Interest payment frequency | Monthly and cumulative |
| Listing | Within 6 business days on BSE |
| Lead Manager | Vibro Financial Services Private Limited |
| Bond Trustee | MITOCON CREDENTIA TRUSTEESHIP SERVICES LIMITED. |
Muthoot Mercantile NCD August 2024 – Interest Rates
| series | I | II | III. | IV | Five | VI | Seven | Eight | Chapter 9 |
|---|---|---|---|---|---|---|---|---|---|
| Frequency of interest payments | Monthly | Accumulation | Accumulation | Accumulation | Monthly | Accumulation | Monthly | Accumulation | Accumulation |
| Term of employment (months) | 400 days | 400 days | 20 | 20 | 36 | 36 | 60 | 60 | 73 |
| Coupon (annual interest rate) | 10.70% | N/A | 10.80% | N/A | 11.25% | N/A | 11.50% | N/A | N/A |
| Effective Yield (annual %) | 11.24% | 10.80% | 11.35% | 10.77% | 11.85% | 11.08% | 12.13% | 11.03% | 12.07% |
| Amount at maturity (Rupees) | 1,000.00 | 1,118.95 | 1,000.00 | 1,185.83 | 1,000.00 | 1,370.50 | 1,000.00 | 1,687.50 | 2,000.00 |
Financial Status of Muthoot Mercantile Limited
| End of period | March 31, 2021 | March 31, 2022 | March 31, 2023 | March 31, 2024 |
|---|---|---|---|---|
| assets | 316.2 | 420.4 | 606.5 | – |
| Revenue | 49.4 | 67.0 | 94.7 | 131.7 |
| Profit after tax | 14.0 | 17.0 | 17.7 | 25.1 |
| Net Worth | 100.4 | 117.4 | 135.6 | – |
*Amount is 10 million rupees
Muthoot Mercantile NCD August 2024 – Why should you invest?
- The company has consistently demonstrated profit margin growth over the past few years, and investors should consider investing in companies with a track record of consistent growth.
- The company has a strong brand name and proven track record in India and has a long history of operations. It offers flexible loan facilities, quality customer service and fast response times. These positive factors will help the company’s growth, benefiting investors through rising share price as well as building confidence among NCD investors and other creditors.
- We offer high interest rates of up to 11.5%.
- We offer secured NCDs, which means that if the company faces financial distress and goes bankrupt for any reason, secured NCD investors will get priority in the repayment of their capital.
Muthoot Mercantile NCD August 2024 – Risk Factors
- The Company has a low credit rating of BBB/Stable from India Ratings and Research Limited and carries a high level of risk.
- We are subject to certain restrictive covenants in our loan agreements and other indebtedness that could limit our operations and ability to grow and adversely affect our business.
- The ability to access capital also depends on credit ratings: lower credit ratings lead to higher borrowing costs.
- We, our promoters and our directors are subject to certain legal proceedings and adverse decisions in such proceedings could have a material adverse effect on our business, financial condition and results of operations.
- The Company’s branch network is concentrated in Kerala, Maharashtra and Odisha, and a significant portion of its revenue is derived from these states. Any interruption in service in these areas could have a material adverse effect on the Company’s results of operations and financial condition.
- Our financial performance depends primarily on interest rate risk, and any future inability to manage interest rate risk could adversely affect our net interest margin, which in turn could have an adverse effect on our business and financial condition.
- In the past, there have been cases of defaults, delays in interest payments and capital repayments by several NBFC companies, making investment in NBFC NCD bonds riskier. Muthoot Mercantile NCD August 24 RHP For all risk factors.
Muthoot Mercantile NCD August 2024 – Should You Invest or Avoid?
Muthoot Mercantile Ltd is an NBFC that offers gold secured loans, investments, health insurance, foreign exchange services and remittances. The August 2024 NCD issue comes with attractive interest rates. The company has been consistently growing its profit margins. The issue offers secured NCDs which are slightly safer compared to unsecured NCDs.
On the downside, the company has a low credit rating of IND/BBB Stable from India Ratings. The company derives majority of its revenue from three states, exposing it to geographical risk. Investors should remember that there have been NCD defaults and delays in interest/principal payments by NBFC companies in the past.
Investors should consider both the pros and cons before investing in such NCD bonds.
Suresh KP is the Founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and NISM Certified Research Analyst. He has been involved in analyzing financial markets for the last 20 years. He can be reached at suresh@myinvestmentideas.com.
