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

Muthoot Mercantile Limited is issuing the Non-Convertible Debentures. These NCDs are BBB/Stable rated by India Ratings and Research. The NCDs are being issued in nine series: coupon ranges from 10.00% to 11.00% p.a. and different tenures of 400 days, 36 months, and 73 months. The NCDs are senior secured and redeemable in nature. 

Muthoot Mercantile Limited 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 Mercantile Limited NCD-IPO. 

Investment Process for Muthoot Mercantile Limited NCD IPO

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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

Issue analysis

Pros 

• The NCD is BBB rated security with a stable outlook.
• The coupon rate is between 10% to 10.75% which is much higher than FDs.

Cons 

• Significant dilution in tangible net worth due to significant losses
• Deterioration in the asset quality

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

About Muthoot Mercantile Limited 

Muthoot Mercantile Limited (MML) was established as a Public Limited Company in 1997 and obtained registration as a Non-Banking Finance Company from the Reserve Bank of India in 2002. As a prominent NBFC, Muthoot Mercantile Limited serves as the flagship entity of the Muthoot Ninan Group, founded by the late M. Ninan Muthoot in 1939. The company specializes in providing loans secured against gold.

Strengths

• Strong Loan Book Growth:
  AUM grew ~30% YoY, reaching INR 7.3 billion in Q1FY25.
• Expanding Branch Network:
  Added 50+ branches in FY23-FY24, taking the total to 264 branches by March 2024.
• Geographical Diversification:
  Reduced concentration in Kerala & Tamil Nadu to 21% of the loan book in FY24 (vs. 99.8% in FY19); expanded into states like MP, Punjab, Maharashtra, UP, and others.
• Improving Profitability:
  Net interest margin improved to 12.15% in FY24 (vs. 10.73% in FY23).
• Rising Productivity:
  Assets under management per branch increased to INR 26 million in FY24 (vs. INR 22.9 million in FY23).

Weakness

• Discontinued Product Line:
  Small-ticket personal loans (~2–3% of portfolio) discontinued in FY25; portfolio winding down (INR 40 million in June 2024 vs. INR 164 million in March 2024).
• High Operating Expenses:
  Still in the process of scaling operations; Opex pressure remains until full branch-level maturity is achieved.
• Co-lending Model Execution Risk:
  Exploring co-lending opportunities, which may carry operational and credit risk if not managed prudently.

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Source- Prospectus March 24, 2025

Disclaimer- The information is published as on date 04/01/2025 based on information available on Prospectus March 24, 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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