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Friday, August 12, 2011

Manappuram Finance limited NCD Analysis Report

Manappuram Finance limited NCD Review

Issue Highlights
Face Value: 1000 Rs.
Issue Price: 1000 Rs.
Issue Period: 18/8/2011 to 5/9/2011
Issue Size: Rs. 400 Crore with the Green Shoe Option of Rs. 350 Crore
Rating:  CARE AA-
Issuance: Compulsorily in Dematerialized Form
Minimum Subscription: 5 NCD (Rs. 5000)
In Multiple of: 1 NCD
Listing: BSE

Who Can Apply?
·         Category 1: various banks & financial institutions, various funds, insurance companies
·         Category 2: various trusts, companies & corporate bodies, partnership firms, scientific and IR organizations
·         Category 3:Individual & HUF (through karta)
Instrument Details

Series
1
2
Interest Rate For Category 1
NA
12%
Interest Rate For Category 2
NA
12%
Interest Rate For Category 3
NA
12.2%
Maturity Date
400 days from the date of allotment
24 months from the date of allotment
Maturity Amount
Rs. 1132.25
Face value +interest accrued
Interest payment
NA
Semi-annually
Yield To Maturity-Category 2
12%
12.34%
Yield To Maturity-Category 1
12%
12.34%
Yield To Maturity-Category 3
12%
12.56%


Company Profile
 Manappuram Finance Limited is one of the leading NBFC companies which lend money against the pledge of household gold jewelry popularly known as gold loans. Company offers short term personal and business gold loans. By March 2011 Company had more than 2 lakh gold loan accounts aggregating to gold loans worth Rs. 63,705 million. Company operates through a network of 2064 branches spread over 20 states and UT’s. Business of the company is concentrated in southern region with 76 % of branches from southern region.
Objects of the Issue:
· to fund the various financing activities including lending and investments
·  issue expenses
· working capital requirement
      Financial Analysis #

CAR (Capital Adequacy Ratio)
29.13%
Debt/Equity Ratio
2.93
Net NPA %
.13%
ICR (Interest Coverage Ratio)
2.27
Debt Ratio
72%


     # FY 11 data
Inference
Fundamentals of this NCD are satisfactory. (Almost negligible NPA percent, ICR above comfort level and adequate CAR) Lower tenure of this NCD makes it interesting for investors to park their fund for small to medium investment period. Business model of the company is very secure and only thing which might go against the profitability of the company is sharp fall in gold prices, but in present scenario probability of the same is very low. Investors may allocate some portion of their debt portfolio to this NCD.
Disclaimer: Analysis is for the information purpose only. Though due diligence has been taken while preparing this report, analyst shall not be responsible for any error and shall not bear any financial liability to the users of the report.

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