9.75% Muthoot Fincorp NCD June 2020 ★ Should you Invest?

Muthoot Fincorp Ltd has come out with public issue of “Muthoot Fincorp NCD June 2020” (non-convertible debentures) offering up to 9.75% interest rate and opens for subscription from June 29, 2020.

Muthoot Fincorp Ltd is a non-deposit taking NBFC (non-banking finance company). The NBFC is focused on loan against gold ornaments & jewellery for personal & business needs. They also have some interest in generation and sale of wind energy and real-estate.

Note: Muthoot Fincorp Ltd is a different company than Muthoot Finance which is market leader in gold loans.

Muthoot Fincorp NCD June 2020 – Significant Points

  • Offer Period: June 29 to July 17, 2020
  • Annual Interest Rates for Retail Investors: 9.00% to 9.75% depending on tenure
  • Tenure: 24 to 60 Months
  • Price of each bond: Rs 1,000
  • Minimum Investment: 10 Bonds (Rs 10,000)
  • Max Investment Limit for Retail Investor: Rs 10 Lakhs
  • Credit Rating: CRISIL A/ Stable; BWR A +/ Stable
  • NCD Size: Rs. 100 Crores with an option to Retain Over-subscription Up to Rs 160 crore
  • Allotment: First Come First Serve
  • Listing: Bonds would be listed on BSE
  • Symbol: MFINCORP6

Learn All about NCDs

NCDs or non-convertible debentures or more popularly known as Bonds are a bit complex investment products. You must understand the product, risk involved, the taxation on interest received and when you sale it. We have done a separate post regarding this titled – Know all about NCDs.

Also you can keep track of upcoming NCD issues here.

Muthoot Fincorp NCD June 2020 – Interest Rate

There are 9 options of investment in Muthoot Fincorp NCD June 2020 (MFINCORP6).

Muthoot Fincorp NCD June 2020 – Investment Options
Muthoot Fincorp NCD June 2020 – Investment Options

Who can Apply for Muthoot Fincorp NCD June 2020?

This issue is open to all Indian residents, HUFs and Institutions.

  1. Category I – Institutional Investors – 20% of the issue is reserved
  2. Category II – Non-Institutional Investors, Corporates – 20% of the issue is reserved
  3. Category III – HNIs – 30% of the issue is reserved
  4. Category IV – Retail Individual Investors – 30% of the issue is reserved

However NRIs cannot apply for this NCD.

Muthoot Fincorp NCD June 2020 Review

The Good

  1. The NCD is secured, which means the above debt is backed by assets of the company
  2. The interest rates are 3%+ higher than your regular Bank FDs
  3. No TDS
  4. Good year on year performance in last few years

The Not so Good

  1. There have been issues with some well rated companies like DHFL, IL&FS where rating agencies suddenly downgrade the rating. This risk always existed but it has come to forefront in last few months
  2. There are NCDs available in secondary market which have higher yields with similar rating. The problem is low liquidity and hence is difficult to buy in large numbers.
  3. COVID-19 has presented new challenges to business and it may impact the company adversely

How to Apply for Muthoot Fincorp NCD?

You can apply online by ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work.

How to apply for NCD using ASBA?

In case you want to subscribe to a new NCD, you can apply the same through ASBA (Applications Supported by Blocked Amount) facility offered by most banks in India. The application process is very simple and the best part your money is only deducted from your account if you receive confirm allotment of units. We have made step by step tutorial for applying to NCD Application using ASBA in SBI. The process is almost similar in all other banks.

In case you don’t want to do it online, you can download the application form from company site or Financial Institutions and submit to collection centers.

Muthoot Fincorp NCD June 2020
Muthoot Fincorp NCD June 2020
 

Should you Invest in Muthoot Fincorp NCD June 2020?

This is high risk NCD and if you understand that invest some part of your Fixed Income investment in this Issue. You should always have diversified portfolio be it fixed deposit, NCD or equity investment. Its good idea to remain invested till maturity because liquidity on exchanges are low and hence you would get lower than market value

Muthoot Fincorp NCD June 2020 FAQs

✅What is Muthoot Fincorp NCD June 2020 credit rating?

The current NCD issue by Muthoot Fincorp has been issued CRISIL/A Stable by CRISIL and BWR/A+ (Stable) by Brickwork Ratings.

✅What is Muthoot Fincorp NCD June 2020 interest rate?

Muthoot Fincorp NCD June 2020 offers 9 investment options with interest rate varying from 9% to 10% depending on tenure of investment.

✅Is Muthoot Fincorp NCD 2020 Taxable?

The interest earned on Muthoot Fincorp NCD 2020 is taxed as per your income tax slab.

In case you sell the Muthoot Fincorp NCD June 2020 before maturity, you would be taxed on capital gains made.
If the NCD was sold within 12 months of allotment, it leads to Short Term Capital Gains else if the selling period is more than 12 months its Long Term Capital Gains
– Short Term Capital Gains would be added to income and taxed as per income tax slab
– Long term capital Gains would be taxed at the flat rate of 10% (u/s 112 of Income Tax Act)

✅How can I buy Muthoot Fincorp NCD June 2020?

The best way to buy Muthoot Fincorp NCD June 2020 is though ASBA facility of your bank. Its easy and can be done through your internet banking from comforts of your home.

✅Is Muthoot Fincorp NCD June 2020 Secured?

Yes the Muthoot Fincorp NCD June 2020 is backed by company assets and in secured.

✅Does Muthoot Fincorp NCD June 2020 has put or call options?

There is NO put or call option for Muthoot Fincorp NCD June 2020.

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