MUTHOOT FINCORP LTD. IPO – April 2023, should you invest?

High Yield | AA-/Stable Rated | Minimum Investment: 10k Only

 

Bond overview 

Muthoot Fincorp Limited is issuing the Non-Convertible Debentures. These NCDs are AA-/Stable rated by CRISIL. The NCDs are being issued in eight series: coupon ranges from 8.40% to 9.37% p.a. and different tenures of 27 months, 42 months, 60 months and 84 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 Muthoot Fincorp Ltd NCD-IPO. 

Investment Process for MFL 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.

Financial Overview

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

Cash flow for last 5 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

Issue analysis

Pros 

• The NCD is AA- rated security with a stable outlook.
• The yield offered is 9.37% which is much higher than FDs.

Cons 

• The operations of NBFC is geographically constrained. It is majorly operated in South India.

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

 

About MFL

Founded in 1997, Muthoot Fincorp Ltd.(MFL) is a non-deposit taking, one of the leading NBFCs in the country. The NBFC primarily deals into lending against gold jewelry.  It is the flagship company of the Muthoot Pappachan Group also popularly known as the Muthoot Blue Group, which has diverse business interests such as hospitality, real estate, and power generation. 

Business Verticals-

1. Gold loan, 
2. Small business loan, 
3. Home Loan, 
4. Auto Loan, 
5. Micro Finance, 
6. Forex, 
7. Money Transfer, 
8. Wealth management services, 
9. Insurance

Strengths

• Strong Gold loan business. MFL is the 3rd largest gold loan non-banking financial company (NBFC).
• Healthy earnings profile for the gold loan segment.
• Diversified product profile with 5 major segments.
• Liquidity stays strong, with Rs 2570 Cr maintained in the form of cash and unutilised bank lines.

Weakness

• Geographically restricted, MFL’s operations are largely concentrated in South India.
• Only 37% of the overall portfolio accounts for non-gold segments.

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