Muthoot Mercentile Limited

Muthoot Mercentile Limited is a non-deposit taking non-banking financial company- base layer (NBFC – Base Layer) registered with the RBI, primarily engaged in the gold loan sector lending money against the pledge of household and/or used gold jewellery ('Gold Loan') primarily to retail customers who require immediate availability of funds, but who do not have access to formal credit on an immediate basis and are also engaged in providing unsecured loans ('Pronote Loan') to individual customers for their personal needs. As of August 31, 2023, they disbursed Gold Loan and Pronote Loan to the customers from a network of 224 branches of the Company in 8 states and union territory of India namely Tamil Nadu, Kerala, Haryana, Maharashtra, Madhya Pradesh, Odisha, Punjab, Uttar Pradesh and Delhi. As of August 31, 2023 they employed 722 persons in the operations. The Gold Loan portfolio as of August 31, 2023 comprised approximately 0.72 lakhs customers aggregating a principal amount of Rs 54,962.63 lakhs in Gold Loan, which accounted for 96.48% of the total loans. The Gold Loan portfolio as of August 31, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021 had outstanding principal amounting to Rs 54,962.63 lakhs, Rs 49,469.77 lakhs, Rs 33,255.80 lakhs and Rs 28,468.69 lakhs respectively and has grown at a CAGR of 31.29% from Fiscal 2021 to August 31, 2023. Company has shown average results and rating is BBB / Stable by India Ratings and Research Private Limited. The rating of NCDs by India Ratings indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations and carry moderate credit risk. Also this is first debt offer from the company. Coupon rates are also lucrative, but we may find better option in market with better ratings. So we give AVOID rating to this debt offer.

• 1 Mathew Mathaininan
• 2 Richi Mathew