Muthoot Finance plans to garner up to Rs 2,000 crore through NCDs

NBFC Muthoot Finance on Monday announced its plan to raise up to Rs 2,000 crore through public offering of Secured Redeemable Non-Convertible Debentures (NCDs) to be utilised primarily for lending activities of the company.  The gold loan company had said earlier to FE that it is confident of exceeding its guidance of 15% growth for the current fiscal year with demand for gold loan appearing to be robust.

The issue of NCDs of face value of Rs 1,000 each is with a base issue size of Rs 100 crore with an option to retain over-subscription up to Rs 1,900 crore aggregating up to tranche limit of Rs 2,000 crore. George Alexander Muthoot , managing director, Muthoot Finance, said, “In the present scenario of lower interest rates and expectations of interest rates falling further, our issue offers safe long term investment options with high stable returns to investors.  “The issue will augment the company’s long term funding requirements, thereby supporting the stable growth that our company envisages.

“We expect the current issue too be well received by the market in line with our previous NCD issues as there are limited comparable investment avenues available.” The Secured NCDs proposed to be issued under this Issue have been rated CRISIL AA/Positive by Crisil and [ICRA] AA (Stable) by Icra.  The NCDs are proposed to be listed on BSE.
The allotment will be on first come first serve basis.

There are 6 investment options for NCDs with ‘monthly’ or ‘annual’ interest payment frequency or ‘on maturity redemption’ payments with coupon ranging from 7.15% per annum to 8.00% per annum, Muthoot sources said. The Kerala-based finance company, which also operates home loan, microfinance and insurance broking subsidiaries, declared a 52 % increase in consolidated net profit at Rs 858 crore in the April-June quarter in the current financial year compared to Rs 563 crore in the first quarter of the last fiscal year.