KLM AXIVA FINVEST LIMITED NCD IPO- February 2023, should you invest?

High Yield | BBB-/Stable Rated | Minimum Investment: 10k 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 8.75% to 11.02% p.a. and different tenures of 400 days, 16 months, 18 months, 2 years, 3 years, 5 years, and 82 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

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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 

• These NCDs are secured providing an additional layer of protection to your investment. 
• The issuer is offering high coupon rates, when compared with FD rates.

Cons

• The company is rated BBB- with stable outlook which is an investment grade rating.

Financial Overview

Snapshot stating the Revenue, Expenses, Net Worth 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

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About KLM Axiva Finvest Limited

KLM Axiva is a non-banking financial corporation registered with the Reserve Bank of India that was established in 1997 as a public limited company. It offers microfinance loans, LAP, and gold loans. The total outstanding portfolio was INR12,863 million as of June 30, 2022. Across numerous areas in Kerala, Tamil Nadu, Karnataka, and Telangana, the company has more than 400 branches.

Quick walk through on Financials details for the 9 months ended December 31, 2022

Strengths

• Strong and Experienced management team
• CAR and Tier I CAR were satisfactory at 20.95% and 13.71%, respectively, as of March 31, 2022, compared to 16.07% and 10.18%, respectively, as of March 31, 2021.
• Improved Profitability Supported by Growth in Operational Scale: KLM recorded Pre-Provision Operating Profit (PPOP) in the Range of Rs. 9 to Rs. 10 crore during FY18-FY21 despite Growth in Loan Book from Rs. 194 crore as on March 31, 2018 to Rs. 733 crore (Net Loan Portfolio) as on March 31, 2021.

Weakness

• Regional loan portfolio concentration
• Asset quality is moderate, however progress was shown in FY22 and H1FY23.

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