Chemmanur Credits and Investments launched its NCDs issue with a Credit rating of IND BBB-/Stable
Chemmanur Credits and Investments offers secured NCDs with attractive yields and an IND BBB-/Stable rating, available until August 8, 2024.
Introduction
Chemmanur Credits and Investments is set to raise Rs 60 crore by issuing secured redeemable non-convertible debentures (NCDs) with a face value of Rs 1,000 each. The issue began on 26 July 2024 and will close on 8 August 2024. The offering includes a base issue size of Rs 40 crore, with the option to retain oversubscriptions up to Rs 20 crore.
Issue Details
The minimum investment is Rs 10,000 (10 NCDs), with further investments in multiples of Rs 1,000. These NCDs will be listed on the BSE. There are nine different series of NCDs, each with a fixed coupon rate and varying tenures: 367 days, 18 months, 24 months, 36 months, 60 months, 24 days, 60 days, and 70 days. Investors can choose between monthly and cumulative interest options. The coupon rates range from 9.5% to 12%, resulting in an effective annual yield between 9.92% and 12.68%.
Utilization of Funds
The funds raised will be used for onward lending, financing, repaying or prepaying interest and principal of existing loans, and for general corporate purposes.
Credit Rating
The NCDs have been rated ‘IND BBB-/Stable’ by India Ratings and Research. This rating indicates a moderate degree of safety regarding timely servicing of financial obligations and a moderate credit risk.
About Chemmanur Credits and Investments
Chemmanur Credits and Investments, part of the Boby Chemmanur Group, is a non-banking financial company (NBFC) primarily offering gold loans in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, and Maharashtra. With over 13 years of experience, the company operates through 270 branches. Besides gold loans, it provides microfinance loans, business and personal loans, money transfer services, and distributes third-party insurance products.
NCD Coupon Rates
| Particulars | Series 1 | Series 2 | Series 3 | Series 4 | Series 5 |
|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Monthly | Monthly | Monthly | Monthly |
| Nature | Secured | Secured | Secured | Secured | Secured |
| Tenor | 367 Days | 18 Months | 24 Months | 36 Months | 60 Months |
| Coupon (% per Annum) | 9.50% | 10.75% | 11.00% | 11.25% | 12.00% |
| Effective Yield (% per Annum) | 9.92% | 11.30% | 11.57% | 11.85% | 12.68% |
| Amount on Maturity (In Rs.) | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 | Rs 1,000 |
| Particulars | Series 6 | Series 7 | Series 8 | Series 9 |
|---|---|---|---|---|
| Frequency of Interest Payment | Cumulative | Cumulative | Cumulative | Cumulative |
| Nature | Secured | Secured | Secured | Secured |
| Tenor | 367 Days | 24 Months | 60 Months | 70 Months |
| Coupon (% per Annum) | NA | NA | NA | NA |
| Effective Yield (% per Annum) | 9.50% | 11.00% | 12.25% | 12.62% |
| Amount on Maturity (In Rs.) | Rs 1,095.52 | Rs 1,232.00 | Rs 1,782.10 | Rs 2,000.28 |
Financial Performance
Over the past three fiscal years, Chemmanur Credits and Investments Ltd. (CCIL) reported total income and net profit/(loss) figures of Rs. 74.74 crore and Rs. 9.24 crore for FY21, Rs. 73.49 crore and Rs. 2.66 crore for FY22, and Rs. 83.21 crore and Rs. 0.80 crore for FY23, with the most recent fiscal year, FY24, showing a total income of Rs. 106.15 crore and a net profit of Rs. 1.72 crore. As of March 31, 2024, the company’s debt-equity ratio was 6.21, which will increase to 6.94 post-issue. Additionally, its net NPA was recorded at 0.38% on the same date.
Conclusion
Chemmanur Credits and Investments, primarily operating in the gold loan sector, reported improved performance for FY24. Despite offering attractive coupon rates, the NCDs are rated ‘IND BBB-/Stable,’ indicating moderate risk. This rating raises concerns, and it might be prudent to consider skipping this investment.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.