Muthoottu Mini Financiers Ltd. (MMFL) a Muthoottu Mini group company is a non-deposit taking systemically important NBFC in the gold loan sector lending money against the pledge of household gold jewellery ("Gold Loans") in the state of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry. It has also recently forayed into micro-finance loan segment in the financial year 2017 wherein the company provides unsecured loans to joint liability group of women customers (minimum of 5 persons) who require funds to carry out their business activities through few of its branches in the state of Kerala. Since FY14 this is the 6th debt offer from this company. MMFL's Gold Loan portfolio as on September 30, 2018, March 31, 2018, March 31, 2017 and March 31, 2016, comprises of 4,21,769, 4,11,558, 5,16,004 and 5,48,854 Gold Loan accounts respectively, aggregating to Rs. 1512 cr.,`Rs. 1554 cr., Rs. 1940 cr. and Rs. 1906 cr. which is 96.35%, 95.31%, 99.01% and 99.60% of total loans and advances as on such specific dates. The company, as on September 30, 2018, has a network of 767 branches spread in the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Haryana, Maharashtra, Delhi and Goa and the union territory of Puducherry and employs 2,905 persons in business operations. For the six month period ended on September 30, 2018, and the Financial Years 2018, 2017 and 2016, its total income was Rs. 153.17 cr., Rs. 334.93 cr., Rs. 435.46 cr. and Rs. 391.14 cr. and profit/ (loss) after tax, for the above periods, was Rs. 11.02 cr., Rs. 14.25 cr. Rs. – (81.09) cr. and Rs. 9.78 cr. respectively. As on 30.09.18, its gross and net NPAs were down to 1.96% and 1.31% respectively. Post this issue its debt-equity ratio will be enhanced from 2.60 to 3.06. This issue is rated IND BBB-/Stable (by India Ratings and Research Private Limited). It indicates that instruments with this rating are considered to have the moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry the moderate credit risk. Considering poor rating, average financial performance, normal coupon rate and availability of other good debt offers, so we give AVOID rating to debt issue.
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