TruCap Finance Limited Bond on Altifi: Overview & Key Details

Name of the Issuer: TruCap Finance Limited
Product: Senior secured NCD (regulated by SEBI)
Yield: 13.50% p.a.
Tenure: ~18 months
Min Investment: ~Rs 1,00,000
Interest repayment: Monthly
Principal repayment: Quarterly
Rating: CARE "BBB"

Key Highlights:

Comfortable capitalization levels supported by equity raise of INR 169 crores between FY21 and FY23
Capital adequacy ratio at 33% as of H1FY24
Strong growth in the AUM that has grown to 780 crore in Sep’23 from 294 crore in Mar’22 largely supported by disbursements through co-lending
Company has reported good collection efficiency of 98% in H1FY24
No cumulative mismatches in ALM
Portfolio quality has been improving over the year with PAR90 of 1.1% in H1FY24 compared to 2.2% in FY23

Overview:

TruCap Finance Limited (formerly known as Dhanvarsha Finvest Limited) is an RBI-registered NBFC that is listed on the NSE and the BSE. The company’s promoters are the Mumbai-headquartered Wilson group, which has business interests across financing, real estate, sustainable infrastructure, agro commodities trading, advisory services, and venture capital investing. TruCap provides financing options to MSMEs, offering them short tenure business loans and gold loans. Gold loans continue to be the core product and is expected to remain the prime focus area for the company. They contribute 65% of the company's portfolio. The remaining 35% is largely unsecured business loans.

As of Sep’23, TruCap had an AUM of INR 780 crore with a Net Worth of INR 231 crore. The company’s operations are spread across Maharashtra, Madhya Pradesh, Delhi, Goa, Uttar Pradesh, Gujarat, Haryana, etc. totalling 11 states with 127 branches. As of Sep’23, Maharashtra and Madhya Pradesh contributed 33% and 17% respectively of the portfolio.

Promoter/ Management:

Rohanjeet Singh Juneja: Rohanjeet is the co-founder and CEO of TruCap. He is a former investment banker and hedge fund manager with over 17 years of experience in research, strategy, portfolio management, financial analysis and mergers & acquisitions. Prior to joining TruCap, between 2017 and 2019, he was with WGC Management Services as Head of Research and Strategy, where he was part of the core group that led strategy for a Housing Finance Company and a Non-Banking Finance Company. He has worked with FrontPoint Partners L.P. as a Financial Analyst and Vice President where he worked on analysis, research and investment in financial services and real estate companies in India, USA and China. He was associated with Seawolf Capital LLC, responsible for investing and managing a portfolio of listed equities within financial services companies in India and USA.

Sanjay Kukreja (CFO): Mr. Kukreja has over 30 years of experience in Financial Planning and Control, Profit Center Operations, Taxation & Budgeting, etc. Before joining TruCap Finance Limited, he was a part of Wilson Holdings Pvt. Ltd as Chief Financial Officer. He has previously worked as Joint CEO in KPL Exports Pvt. Ltd and has also been previously associated with Rotex Wheels Pvt. Ltd. He also worked as CFO with RMG Alloy Steels Ltd. (part of the Welspun Group). He has completed his FCA from The Indian Institute of Chartered Accountants of India.

Mahendra Kumar Servaiya (Principal Officer & Credit Head): Mr. Servaiya is part of the core team with over three decades of banking experience. He last served as an AGM in the Credit team of Union Bank and retired after spending close to 32 years with the bank. At TruCap Finance Limited, Mr. Servaiya has a dual responsibility; he takes care of communication and compliance filings with the Reserve Bank of India and heads the credit function of the company.

Key Financials:

All figures in INR crore

Balance Sheet	FY 22	FY 23	H1FY 24
Cash & cash equivalents	58	67	41
Bank balances	20	20	32
Loans Portfolio	294	420	473
Investments	51	81	45
Other financial assets	22	55	80
Fixed Assets	29	33	37
Total Assets	474	676	708
Total Equity	174	223	231
Borrowings	285	441	464
Provisions	5	2	3
Other Liabilities	10	10	10
Total Liabilities & Equity	474	676	708

P&L Statement	FY 22	FY 23	H1FY 24
Interest Income	44	92	53
Total Income	70	124	80
Finance cost	25	52	35
Impairment on Financial instruments	1	-1	2
Operating Expenditure	33	66	39
Profit Before Tax	10.7	7.2	4.4
Tax Expense	3	2	2
PAT	7.4	5.5	2.8

TruCap’s portfolio is largely comprised of Gold and business loans with an average ticket size of ~INR 2 lakh. It has its presence in 11 states through 127 branches.

Brief on underlying security:

The bonds are secured by the loans originated by TruCap, which are largely Gold and business loans mirroring the overall portfolio of the company. The security cover is 1.1x of the principal outstanding of the bonds at any given time during its tenure. This means the bond is secured by first ranking, exclusive and continuing charge on this pool of loans. The details of these loan receivables are provided to the Debenture Trustee on a monthly basis. Further, loans that are overdue for over 60 days are never more than 10% of the Portfolio and they need to be replaced with loans that are not overdue, if it crosses this threshold. At least 50% of the loans in the security cover are gold loans with ticket size less than USD 10,000.

Lenders:

The prominent lenders in TruCap are:

Banks and FIs:

HDFC Bank
State Bank Of India
Kotak Mahindra Bank
Utkarsh SFB
ESAF SFB

NBFCs:

Northern Arc Capital
IKF Finance
Kisetsu Saison Finance
Hinduja Leyland Finance
Maanaveeya Development & Finance

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.

Overview – TruCap Finance Limited Bond on Altifi

Balance Sheet

FY 22

FY 23

H1FY 24

Total Assets

474

676

708

Total Equity

174

223

231

Total Liabilities & Equity

474

676

708

P&L Statement

FY 22

FY 23

H1FY 24

Total Income

70

124

80

Profit Before Tax

10.7

7.2

4.4

PAT

7.4

5.5

2.8

Brief on underlying security:

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