Muthoot Mercantile Limited issued secured, redeemable, non-convertible debentures (secured NCDs) from May 6, 2024 to May 17, 2024. The issue size is Rs 100 crore, with a base size of Rs 50 crore and a greenshoe option of another Rs 50 crore. Each NCD has a face value of Rs 1,000 and the minimum investment is Rs 10,000 (10 NCDs). The NCDs come in various maturities ranging from 367 days to 75 months and offer monthly or cumulative interest payments. They will be listed on the BSE and credit-rated IND BBB/Stable by India Ratings & Research Private Limited. Allotment will be on a first come first served basis and debenture trustee services will be provided by Mitcon Credentia Trusteeship Services Limited.
| Particulars | Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 |
| Frequency of Interest Payment | Monthly | Cumulative | Monthly | Cumulative | Monthly | Cumulative |
| Nature | Secured | Secured | Secured | Secured | Secured | Secured |
| Tenor | 367 Days | 367 Days | 18 Months | 18 Months | 24 Months | 24 Months |
| Coupon (% per Annum) | 10.50% | NA | 10.50% | NA | 10.60% | NA |
| Effective Yield (% per Annum) | 11.02% | 10.60% | 11.02% | 10.34% | 11.13% | 10.45% |
| Amount on Maturity (In Rs.) | Rs 1,000.00 | Rs 1,106.00 | Rs 1,000.00 | Rs 1,159.00 | Rs 1,000.00 | Rs 1,292.92 |
| Particulars | Series 7 | Series 8 | Series 9 | Series 10 | Series 11 |
| Frequency of Interest Payment | Monthly | Cumulative | Monthly | Cumulative | Cumulative |
| Nature | Secured | Secured | Secured | Secured | Secured |
| Tenor | 36 Months | 36 Months | 60 Months | 60 Months | 75 Months |
| Coupon (% per Annum) | 10.75% | NA | 10.80% | NA | NA |
| Effective Yield (% per Annum) | 11.30% | 10.66% | 11.35% | 10.63% | 11.73% |
| Amount on Maturity (In Rs.) | Rs 1,000.00 | Rs 1,355.10 | Rs 1,000.00 | Rs 1,657.16 | Rs 2,000.00 |
For onward lending, financing, and repayment/prepayment of principal and interest on existing borrowings; as well as for general corporate reasons.
India Ratings and Research Pvt Ltd rates this debt offer as IND BBB/ Stable. In its report on the NCDs by India Ratings, it may be seen that these instruments have a moderate level of safety for repayment of debt in time and carry a low to moderate credit risk. This rating does not imply any recommendation or advice to buy, sell or hold securities but investors should make their own decisions.
Over the past few years MML has seen continuous improvement in its financial results. In the financial year 2021, the company had a total income of Rs.49.39 crores and net profit of Rs 14.02 crores. In FY22 and FY23, MML recorded total incomes of Rs 67.02 crores and Rs 94.67 crores respectively as well as net profits worth Rs 17.02 crores and Rs 18.19 crores respectively. For the first nine months of FY24, which ended on December 31, 2023, MML achieved a net profit of Rs 20.01 crore on a total income of Rs 91.15 crore, evidencing sustained growth in both revenue and earnings.
Inspecting its asset worthiness, it was evident that MML had kept off with low NPA ratios; this signifies efficient asset-worthiness management. The net NPA ratios were 0.16% during FY21, thereafter slightly increased to 0.33% in FY22 then dropped to 0.11% by FY23, thereafter remaining at 0.45% up to the first nine months of FY24.
As of December 31, 2023, MML reported a debt-equity ratio of 3.85, which is expected to increase to 4.51 following the recent issue. The company’s paid-up equity capital was recorded at Rs 29.42 crore, with free reserves amounting to Rs 121.94 crore, providing a solid financial cushion.
This is MML’s second debt offer since December 2023. It has had an average financial performance to date. Poor reputation notwithstanding, this offer is associated with attractive interest rates hence avoiding it seems unnecessary.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.
Published on: May 7, 2024, 6:44 PM IST
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