10% Muthoot Homefin (India) Limited NCD – Apr’19 – Should you Invest?

Muthoot Homefin (India) Limited has come out with public issue of non-convertible debentures (NCD) offering up to 10% interest rate. The company was incorporated on August 26, 2011 and is currently the wholly owned subsidiary of Muthoot Finance Limited, which is one of India’s largest gold financing companies by loan portfolio. Company focuses on providing affordable housing loans to Lower Middle Income groups and Economically Weaker Sections of society in tier 2, tier 3 and tier 4 cities.

Muthoot Homefin NCD – Significant Points:

  • Offer Period: April 8 to May 7, 2019
  • Annual Interest Rates for Retail Investors: 9.25% to 10% depending on tenure
  • 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 AA/Stable” by CRISIL
  • NCD Size: Rs. 150 Crores with an option to Retain Over-subscription Up to Rs 300 crore
  • Allotment: First Come First Serve
  • Listing: Bonds would be listed on BSE and will entail capital gains tax on exit through secondary market

Also Read – Know NCD – Investment Tips, TDS and Taxation

Muthoot Homefin NCD – Investment Options:

There are 10 options of investment in Muthoot Homefin NCD.

Muthoot Homefin India Limited NCD – April 2019 – Investment options

Muthoot Homefin India Limited NCD – April 2019 – Investment options

Click to Know about latest NCD issues

Muthoot Homefin NCD – Who can Apply?

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

  1. Category I – Institutional Investors – 10% of the issue is reserved
  2. Category II – Non-Institutional Investors, Corporates – 10% of the issue is reserved
  3. Category III – HNIs – 30% of the issue is reserved
  4. Category IV – Retail Individual Investors – 50% of the issue is reserved

However NRIs cannot apply for this NCD.

Also Read: 25 Tax Free Incomes & Investments in India

Why you should invest?

  1. AA Credit rating means less likely hood of credit default
  2. The NCD is secured, which means the above debt is backed by assets of the company
  3. wholly owned subsidiary of Muthoot Finance Limited, which is one of India’s largest gold financing companies
  4. The interest rates are 2% higher than your regular Bank FDs
  5. No TDS if invested in Demat Form

Why you should not invest?

  1. 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.
  2. The present Tax Free Bonds are offering yields up to 6.5% in secondary market, which is better investment for People in highest tax bracket.

How to Apply?

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.

Learn: How to apply for NCD issues using ASBA?

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 Homefin Limited NCD – April 2019Muthoot Homefin Limited NCD – April 2019

Muthoot Homefin Limited NCD – April 2019

Recommendation:

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

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