High Yield | IND BBB-/Stable Rated | Minimum Investment: 5k Only

 

Bond overview 

KLM Axiva Finvest Limited is issuing the Non-Convertible Debentures. These NCDs are BBB- rated with stable outlook by IND Ratings & Research. The NCDs are being issued in ten series: coupon ranges from 9% to 11% p.a. and different tenures of 400 days, 16 months, 18 months, 2 years, 3 years, 5 years, and 79 months. The NCDs are secured and redeemable in nature. 

Coupon rates and effective yield for each of the series 

Allocation Ratio

The allocation ratio is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI.  Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for KLM Axiva Finvest NCD-IPO. 

Investment Process for KLM Axiva Finvest NCD IPO

You can invest in IPOs via GoldenPi in 3 easy steps.

If the investment amount is less than & up to 10 lakhs, retail investors can apply for an IPO online.

If the investment amount is more than 10 Lakhs. 

Issue analysis

Pros 

• The yield offered is up to 11.3% which is much higher than many traditional fixed-income investments like FDs.
• The company has adequate Capital Adequacy Ratio in order to overcome unexpected losses during the year.
• The minimum investment amount for these NCDs is ₹5,000, with additional investments in increments of ₹1,000. This flexibility allows you to diversify your investment portfolio effectively.
• In one of the series provided by the company, there is an option for investors to redeem their investment at double the Face Value on maturity.
• The company has been actively raising money through NCDs and sub debt from local high-networth individuals and retail investors in Kerala.

Cons

• The ratings of the company is  BBB-/Stable by IND which is a slightly lower grade rating.
• The company is prone to regulatory risk associated with RBI and other regulators as well.

Liquidity

KLM Axiva Finvest Limited  has a strong liquidity profile with unencumbered cash and liquid investments of 68.08 Crores as of 31st March,2024. The upcoming public issuance of NCDs in July 2024 is expected to further enhance its liquidity profile.

Financial Overview

Snapshot stating the Revenue, Expenses, and PAT (In crores)

Cash flow for last few years (In crores)

Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.

• • *Cash flow from operating activities reflects the amount a company generates through its product of services.
  • **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
  • ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

To get better returns than Bank FDs, invest in NCD-IPOs online. 

About KLM Axiva Finvest Limited

KLM Axiva Finvest is a Kerala based non-deposit taking systemically important NBFC ( Middle Layer ) registered with RBI. Since Incorporation in 1997, the company has been serving Low and middle income individuals and businesses that have limited or no access to formal credit facilities and finance channels. KLM operates in four business verticals mainly- Gold loan and household jewelry loans, MSME Loans, Personal Loans and Microfinance Loans. Apart from that the company also provides Money transfer facility, Insurance and Forex related services to their customers. Mr Manoj Ravi is serving the position of Chief Executive Officer in the company.

Here is a table below illustrating the % of  interest income generated by the company across its business segments.

Business Verticals	FY-2023	FY-2024
Gold Loans	64.60%	69.81%
MSME Loans	20.38%	16.85%
Microfinance Loans	12.04%	9.19%
Personal Loans	2.98%	4.15%
Total	100%	100%

Approximately 70% of the business of the company is generated through Gold loans and household jewelry Loans.

Key Highlights 

Strengths

• Strong network– As of June,2024 the company has a wide,strong and stable network of 670 branches across six Indian states namely Kerala, Karnataka, Tamil Nadu, Telangana, Andhra Pradesh and Maharashtra.
• Consistent Financial performance- The company’s Assets Under Management (AUM) have surged from ₹1,07,296.71 lakhs as of March 31, 2022, to ₹1,72,095.82 lakhs as of March 31, 2024, reflecting a robust CAGR of 26.65%. This growth highlights the company’s strong financial performance and enhances its ability to seize new opportunities and expand its market presence.
• Experienced Management- The company is headed by Mr. Shibu Varghese (whole time director) who has more than 30 years of experience in the Financial Services and is supported by seasoned professionals for the daily operations
• Lower Net Non-Performing Asset Ratio– The company boasts an impressive net NPA ratio of 0.66%, demonstrating exceptional asset management. This ratio constitutes its diverse loan portfolio, including gold, MSME, personal, and microfinance loans.

Weakness

• Geographically Concentrated–  KLM Axiva Finvest headquartered in Kerala, has more than 54% of its customers from the state alone, and the rest is concentrated in the southern states like Tamil Nadu and Andhra Pradesh.
• Intense Competition- KLM Axiva  faces intense competition from other Gold loan providers, including both established players and new entrants offering lucrative interest rates.

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Source- Prospectus July 18, 2024

Disclaimer – The information is published as on date 23/07/2024 based on information available on Prospectus July 18, 2024. The information may be subject to change in case of change in terms of prospectus or any other reason as the case may be. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors