Muthoot Finance NCD raises Rs 2,967 crore on day 1

Investors who put in applications for more than Rs 10 lakhs are defined as HNIs, with this category of investors putting in applications worth Rs 2,333 crore. Institutional investors put in another Rs 500 crore, while Rs 131 crore came in from ret...

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“There is a good quality NCD issue after a long time. Given the low interest rate environment, high rates of 8%, attracted investors,” said Ajay Manglunia, Managing Director and Head (Institutional Fixed Income), JM Financial.
Mumbai: The public issue of non-convertible debentures (NCD) of Muthoot Finance collected Rs 2,967 crore on the first day, with the bulk of the money coming in from high net-worth individuals (HNIs).

Investors who put in applications for more than Rs 10 lakhs are defined as HNIs, with this category of investors putting in applications worth Rs 2,333 crore. Institutional investors put in another Rs 500 crore, while Rs 131 crore came in from retail investors.

“There is a good quality NCD issue after a long time. Given the low interest rate environment, high rates of 8%, attracted investors,” said Ajay Manglunia, Managing Director and Head (Institutional Fixed Income), JM Financial.


Distributors point out that even though the rating is a notch lower than the highest AAA, investors are comfortable with the company due to its strong financials. It has 165 tonnes of gold jewellery kept as security and a 45% margin of safety on loans.

Prior to this, in January 2020, there was an NCD issue from Tata Capital Housing Finance, which mobilized Rs 2,100 crore.

Muthoot Finance is offering NCDs with tenures of 38 months and 60 months. There is an option to take interest income monthly, annually or on maturity. Since the rates on offer from 7.15% to 8% are higher by 150- 250 basis points as compared to traditional bank deposits, they have attracted huge interest from HNIs.
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NCDs can be bought or sold on stock exchanges, though liquidity could be low and there is no tax deduction at source (TDS) on interest income.
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