Details of the Corporate Bond:
- Name of the Issuer: Muthoottu Mini Financiers Limited
- Product: Senior secured NCD (regulated by SEBI)
- Yield: 10.70% p.a.
- Tenure: ~20 months
- Min Investment: ~Rs 1,00,000
- Interest repayment: Monthly
- Principal repayment: Maturity
- Rating: IND 'A-'
Key Highlights:
- Strong brand presence in the southern geographies with a history of over 6 decades in the gold loan business
- Company reported a profit of 47 crore in H1 FY24 as compared to a profit of 67 crore in FY23, PAT margins have improved at 14.4% from 12.4% in FY23
- Steady growth of 22% in the AUM with a book size of 3049 crore in Mar23 up from 2499 crore in Mar22 and further to 3312 crore in Sep23; supported by improved branch network over the last few years which stands at 888 as of H1 FY24
- Entity maintained a stable portfolio quality with a PAR30 of 2.6% as on Sep23 as against the PAR30 of 3% as of FY23; gold loan book has outperformed other asset classes during the Covid period
Overview:
Muthoottu Mini Financiers, a Kerala-based non-deposit taking non-banking finance company was incorporated on March 18, 1998, and operated as an investment company for other group entities until FY06. MMFL then started gold loan advances from FY07 and undertook rapid branch expansions from FY09 onwards. Muthoottu Mini, lends loans against gold jewellery, which forms around 93% of the total loans. The company operates through 888 branches across a wide geographic spread. The AUM of the entity stood at 3312 crore at H1FY24.
Muthoottu Mini has a networth of 672 crore as on Sep 30, 2023 with a CRAR of 24%. Operations are spread across Tamil Nadu, Telangana, Kerala, Karnataka, Andhra Pradesh etc. totalling about 12 states. Company is penetrating deeper into the southern states and plans to expand its branch network in the western and northern states of India over next fiscal.
Promoter/ Management:
Nizzy Mathew (Chairperson & Wholetime Director): With over 25 years’ experience in managing NBFCs, she provides her expertise in taking the Company forward. Be it women-friendly gold loans or Micro-Finance for gainfully employed women or attracting a strong women workforce in the company, she has made the dreams of many come true. Product and business development are her forte. She has her pulse on the industry and is a key strategist in driving the Company’s growth.
Mathew Muthoottu (Managing Director): He is the Fourth-generation leader from the Muthoottu Family. He took over the reins of administration from his father Mr Roy M Mathew in 2016. Mr Mathew Muthoottu holds a bachelor’s degree in commerce from Mahatma Gandhi University, Kerala and he went to University of Cambridge, UK for Master’s in Business Management.
PE Mathai (CEO): He holds a bachelor’s degree in science from the University of Kerala. He joined the Company in 2019. Prior to joining Company, he was associated with South Indian Bank Limited and retired as a general manager in 2010. He has also been the chief executive officer with Muthoot Precious Metals Corporation and as general manager with Muthoot Finance Limited.
Ann Mary George (CFO): She has around 11 years of experience working in the company starting as the Manager- Finance and Accounts and being promoted to CFO in 2016. Prior to joining Muthoottu Mini in 2008, she was associated with Saraf Trading Corporation Private Limited. She holds a bachelor's degree in commerce from University of Calicut and is also associate member of the Institute of Chartered Accountants of India.
Key Financials:
All figures in INR crore
|
Balance Sheet |
FY 22 |
FY 23 |
H1FY 24 |
|
Cash & cash equivalents |
126 |
40 |
93 |
|
Bank balances |
380 |
315 |
370 |
|
Loans Portfolio |
2499 |
3263 |
3312 |
|
Investments |
9 |
10 |
10 |
|
Other financial assets |
55 |
54 |
53 |
|
Fixed Assets |
184 |
195 |
198 |
|
Total Assets |
3253 |
3877 |
4036 |
|
Total Equity |
558 |
625 |
672 |
|
Borrowings |
2651 |
3073 |
3320 |
|
Provisions |
22 |
19 |
20 |
|
Other Liabilities |
22 |
160 |
24 |
|
Total Liabilities & Equity |
3253 |
3877 |
4036 |
|
P&L Statement |
FY 22 |
FY 23 |
H1FY 24 |
|
Interest Income |
414 |
520 |
306 |
|
Total Income |
430 |
544 |
325 |
|
Finance cost |
224 |
283 |
168 |
|
Impairment on Financial instruments |
7 |
-2 |
1 |
|
Operating Expenditure |
140 |
181 |
94 |
|
Profit Before Tax |
59.4 |
81.8 |
61.8 |
|
Tax Expense |
13 |
15 |
15 |
|
PAT |
46.3 |
67.3 |
46.8 |
Muthoottu’s portfolio is largely comprised of gold loan, micro finance loans and loan against property (LAP) loans with an average ticket size of ~INR 1 lakh. As of Q1FY24, about 47% of the AUM consist of loans over INR 1L and 27% of the AUM is in INR 0.5-1L range. In terms of tenure, around 61% of the book is in 6-9 months and 16% is in 3-6 months.
Lenders:
The prominent lenders in Muthoottu are:
Banks:
- IDFC First
- HDFC Bank
- Canara Bank
- South Indian Bank
- IndusInd Bank
- Bank of Baroda
- Bandhan Bank
- Catholic Syrian Bank
NBFCs:
- Tata Capital
- HLF
Disclaimer: The content of this blog should not be considered as financial or investment advice. Readers/Viewers may consult their financial advisor before any investment.