Muthoot Fincorp Limited IPO

Rating

The rating of an issuer company reflects its past growth and performance. The rating increases when the company consistently performs well and decreases when it is not performing well.

Categories

Low risk:

AAA, AA+, AA, AA-, A+, A, A-

Moderate risk

BBB+, BBB, BBB-, BB+, BB

High risk

BB-, B+, B, B-, C, D

The rating agency for this Bond is Crisil Ratings Limited.

About

Headquartered in Kerala, Muthoot Fincorp Limited is a non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI) and engaged primarily in offering gold loans. These loans are secured by gold jewellery and cater to individuals who face challenges accessing formal credit. They include Muthoot Blue Super Value Loan, Easy Blue, and 24x7 Express Gold loan. In addition to gold loans, the company provides foreign exchange and money transfer services as a sub-agent of registered agencies. Muthoot Fincorp is also involved in the generation and sale of wind energy in Tamil Nadu and engages in real estate activities through joint ventures. Muthoot Fincorp has 3,757 branches across 25 states and employs 29,663 people. The company has recently been authorised to act as a corporate agent under the Insurance Act, 1938. Use of Proceeds: The proceeds from the current issue of NCDs are proposed to be used for the following purposes: Onward lending, financing, and refinancing the existing indebtedness of the company (payment of interest and/or repayment/prepayment of the principal of borrowings) - at least 75 percent of the amount proposed to be financed from net issue proceeds General corporate purposes - at least 25 percent.;

Pros and Cons

Pros

Cons

Muthoot Fincorp claims to have been operating in the gold loan market for over 20 years and is one of the largest Indian NBFCs in this space. The company claims that its deep experience and specialised focus on gold loans have enabled it to create a niche in the market, particularly in South India, where its brand is well-recognised.

With 3,757 branches across 25 states, Muthoot Fincorp claims an extensive network, particularly in rural and semi-urban areas. The company claims that this large footprint enables easy access to its services, catering to a wide range of customers, including small business owners, farmers, and salaried individuals. It further claims that its significant presence in underserved rural areas provides a competitive edge in reaching new customers.

Muthoot Fincorp claims to have established strong relationships with various nationalised and private banks, allowing it to access capital at competitive rates. The company uses a variety of funding methods, including term loans, non-convertible debentures, and securitisation transactions, which it claims help it to maintain flexibility and efficiency in managing its gold loan business. Furthermore, the company claims to have been assigned the following credit ratings: Crisil AA-/Stable for its bank facilities, Crisil AA-/Positive and BWR AA/Stable by Brickworks for its non-convertible debt instruments, Crisil A+/Positive and BWR A+/Stable for perpetual bonds, and Crisil A1+ for its short-term debt programme.

Muthoot Fincorp Limited

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