Kosamattam Finance NCD offer– Risky bet

Kosamattam Finance NCD offer– Risky bet

FPJ BureauUpdated: Saturday, June 01, 2019, 04:09 AM IST
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Kosamattam Finance, a NBFC primarily engaged in gold loan business, is coming out with its fourth debt offer since April 2014 and has joined the list of frequent debt-market visiting company.

The company is now coming out with its NCD offer for Rs. 200 crore (including green shoe option of Rs. 100 crore). The issue opens on February 10 and closes on or before March 11. Post allotment NCDs will be listed on BSE.

The company is issuing Secured and Unsecured Redeemable Non-Convertible Debentures of Rs. 1000 each under seven series and has coupon rates ranging from 11% to 13% and has tenure ranging from 400 days to 70 months and Monthly and Cumulative payment options. Effective yield ranges from 11.75% to 13.80% and thus the offer looks very attractive, but the rating is poor. The company is raising these funds to meet its lending business purpose. Investors can opt for allotment in demat or physical mode, but trading will take place only in demat mode.

Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD thereon, thereafter. This issue is rated CARE BBB- (Triple B minus) by CARE that indicates instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk. The company’s NPAs have risen in the current fiscal till November 2014 end to a level of 0.78% from 0.14% (on net basis).

Remarks: Despite lucrative coupon rates, offer appears risky bet.

(Disclaimer: Author has no plans to invest in this offer)

(Email: dilip_davda@rediffmail.com)

 Dilip Davda

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