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

Muthoot Fincorp Ltd is issuing Non-Convertible Debentures. These NCDs are AA-/Stable by CRISIL. The NCDs are being issued in fourteen series: yield ranges from 9.38% to 10.11% p.a. and different tenures of 18 months, 24 months, 36 months, 60 months, and 72 months. The NCDs are secured and redeemable in nature.

Muthoot Fincorp Ltd NCD IPO: 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 Muthoot Fincorp Ltd NCD IPO

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Financial Overview

Snapshot stating the Revenue, Expenses, EBIT, Net Worth and PAT

                                                                                                                          (Amount in Rs. Cr)

Cash flow for last 5 years

                                                                                        (Amount in Rs. Cr)

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 10.11% 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. 

Strengths

Strong Group Support:

• MCSL benefits from substantial financial, operational, and managerial backing from MPG, whose flagship company is Muthoot Fincorp Ltd (MFL). This association enhances MCSL’s credibility and operational capabilities.

Adequate Capital Position:

• The company maintains a robust capital structure, with a capital adequacy ratio (CAR) of 20.5% as of March 31, 2024, well above the regulatory requirement of 15%. This strong capital base supports its lending operations and growth initiatives.

Improved Asset Quality:

• MCSL has made significant strides in enhancing its asset quality. The gross non-performing assets (NPAs) ratio decreased to 10.2% as of March 31, 2024, from 20.6% the previous year, primarily due to the sale of a ₹235 crore non-performing portfolio to an Asset Reconstruction Company (ARC). 

Weakness

Modest, Though Improving, Asset Quality:

• Despite improvements, the company’s asset quality remains modest. The 90+ days past due (dpd) stood at 3.9% as of September 30, 2024, indicating ongoing challenges in managing delinquencies.

Moderation in Earnings Profile:

• MCSL has experienced a moderation in its earnings profile, with a return on assets (RoA) of 1.2% in fiscal 2024, down from 1.5% in fiscal 2023. This decline reflects pressures on profitability.

Geographical Concentration:

• The company’s operations are predominantly concentrated in southern India, making it susceptible to regional economic downturns and market saturation. As of March 31, 2024, approximately 70% of its loan portfolio was concentrated in this region.

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Source- Tranche IV Prospectus January 29, 2025

Disclaimer- The information is published as on date 4/2/2025 based on information available on Tranche IV Prospectus January 29, 2025. The information may be subject to change in case of change in terms of prospectus or any other reason as the case maybe. Contents which are exclusively for educational information/knowledge sharing on capital market concepts and has no influence the investment/sale decisions of any investors

About GoldenPi Expert

With over 15 years of experience across fixed income and debt markets, he brings deep domain expertise along with a strong focus on investor education and transparency. An alumnus of IIT Kharagpur and IIM Calcutta, his views are personal and should not be considered investment advice.

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