Published on Sunday, August 28, 2016 by Dilip Davda
Frequent visitor to debt market Kosamattam Finance Ltd (KFL) is once again coming out with its NCD offer to mobilize Rs. 100 crore with a green shoe option to retain oversubscription to the extent of Rs. 100 crore, making the aggregate size of the offer of Rs. 200 crore. Kosamattam Finance that is primarily engaged in Gold Loan business is now doing business in areas such as money transfer services, foreign currency exchange and air ticketing services.
The company is offering Secured redeemable non-convertible debentures of Rs. 1000 each. It opens for subscription on 29.08.16 and will close on or before 27.09.16. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. The offer has tenure of 400 days, 18 months, 36 months, 48 months and 78 months and interest payment modes cumulative and monthly as per the choice of investors. Coupon rates vary from 9.25% to 11%. Although coupon rates are lucrative, its poor grading makes is a bit risky. Post issue its debt equity ratio will stand enhanced from 8.83 to 9.94. Funs mobilized though this issue will be used for onward lending as well repayment of existing loans with interest thereon.
On performance front, the company that badly suffered for FY 15 has posted improvement in top and bottom line for FY 16. The issue is rated CARE BB+ for an amount up to Rs. 175 crore and CARE BB for an amount up to Rs. 250 crore that indicates that instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.
Issue is solely managed by Vivro Financial Services Pvt Ltd and IL & FS Trustee Company Ltd is the Debenture Trustee. Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, NCDs will be listed on BSE.
On merchant banker’s front, it has no track record on equity front since 2009 and has done mainly few debt offers in recent past as per details given on their web site. Vivro is a lesser known entity in primary market.
Conclusion: Considering poor rating, Risk savvy investors may consider investment for medium term.
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.>
(SEBI registered Research Analyst-Mumbai).
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
