Overview – The Muthoot Microfin Limited Bond on Altifi

Details of the offering

• Name of the Issuer: Muthoot Microfin Limited
• Product: Senior secured MLD (regulated by SEBI)
• Tenure: ~ 5 months
• Payout: Reference index is 10Yr G-Sec 5.77 GS 2030 and the last traded price is 91.44

• Min Investment: Rs. 11,30,000
• Interest repayment: Maturity
• Principal repayment: Maturity
• Rating: CRISIL A+

Key Highlights:

• Strong support from parent entity Muthoot Fincorp, which holds 60.30% as on Mar23
• Strong growth in AUM over the last fiscal to INR 9088 crore in Mar23 from INR 6234 crore in Mar22, at a growth of 46%. As of Mar23, the company had a Net Worth of INR 1626 crore
• Comfortable capitalization levels with CRAR of 20.45% as of Mar23 with leverage of 4.1x; supported by capital raise of around INR 109 crore in FY23 largely from Greater Pacific Capital
• Wide geographical presence with 1172 branches in 17 states and has good business vintage and strong brand presence especially in Southern markets

Overview:

Muthoot Microfin (MML) is a part of Muthoot Pappachan Group (MPG) and provides microfinance loans to women. MPG started its microfinance operations in 2010 as a separate division of Muthoot Fincorp Ltd (MFL), the flagship company of the group. In December 2011, the group acquired a Mumbai-based NBFC, Pancharatna Securities Ltd, and renamed it MML. In March 2015, MML received an NBFC-MFI licence from the RBI. As on March 31, 2023, MFL held 60.3% equity and MFL's promoters held 8.6% in MML. Along with the promoters, MML's board includes one member nominated by Creation Investments and Greater Pacific Capital and four independent directors.

MML had AUM of INR 9088 crore and networth of INR 1626 crore as on March 31, 2023. Operations of the microfinance division are spread across Kerala, Tamil Nadu, Puducherry, Karnataka, Maharashtra, Gujarat, Haryana, Rajasthan, Uttarakhand, Madhya Pradesh, Uttar Pradesh, Odisha, West Bengal, Punjab, Chhattisgarh, Jharkhand, Bihar and Himachal Pradesh. As of Sep23, Tamil Nadu, Kerala and Bihar contributed 26%, 17% and 10% respectively of the portfolio. The company has crossed the AUM of INR 10k crore which includes colending book of ~INR 540 crore with some of the major co-lenders being Cholamandalam, Northern Arc and Incred.

Promoters:

Thomas Muthoot is one of the Promoters and the Managing Director of the Company. He holds a Bachelor of Law degree from University of Kerala. He has over 37 years of experience in the field of financial services.

Thomas John Muthoot is a Promoter and a Non-Executive Director of the Company. He holds a Bachelor of Commerce degree from University of Kerala. He has also completed owner/president management program from Harvard Business School. He has over 37 years of rich hands-on experience and exposure in all facets of Non-Banking Financial Services. He also led the way for the diversification of the group into other major industries like power, hospitality, automotive.

Thomas George Muthoot is one of the Promoters and a Non-Executive Director of the Company. He attended University of Kerala to pursue bachelor’s in commerce. He was previously the chairman of NBFCs Kerala and a committee member of the Finance Companies Association, Chennai. He has over 37 years of experience in the field of financial services.

Key Financials:

All figures in INR crore

MML’s portfolio is comprised of microfinance loans to women with an average ticket size of INR 30-40k. About 61% of the AUM consisted of loans of INR 25k-50k and 37% of the AUM is of more than INR 50k as on Mar23. In terms of tenure, around 90% of the book is in the range of 1-2 yrs. Muthoot Microfinance has its presence in 17 states through 379 districts and 1172 branches.

Lenders:

The prominent lenders in Muthoot are:

Banks:

• State Bank Of India
• ICICI Bank
• Bandhan Bank
• Standard Chartered Bank
• IDFC Bank

NBFCs and FIs:

• Northern Arc Capital
• Blue Orchard
• NABARD

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.