KLM Axiva Finvest Limited NCD – All You Need to Know

KLM Axiva Finvest Limited, established in 1997, is a non-deposit-taking systemically important NBFC (Middle Layer) primarily catering to low- and middle-income individuals and businesses. The company has announced the issuance of Secured Non-Convertible Debentures (NCDs) under its November 2024 offering, providing investors with attractive returns and diversified options. Here’s a comprehensive look at the issue, the company’s business model, strengths, weaknesses, and strategies.

Key Details of KLM Axiva Finvest NCD

• Issue Period: November 14, 2024, to November 28, 2024
• Security Type: Secured, Redeemable NCDs
• Base Issue Size: ₹50 Crores
• Oversubscription Size: ₹50 Crores
• Total Issue Size: ₹100 Crores
• Issue Price: ₹1,000 per NCD
• Tenor Options: 400 days, 16 months, 18 months, 2 years, 3 years, 5 years, and 79 months
• Coupon Rates: Ranging from 9.50% to 11.00%, with effective yields up to 11.30%
• Payment Frequency: Monthly, Annual, and Cumulative options available
• Listing: BSE
• Credit Rating: Rated "ACUITE BBB/Stable" and "IND BBB/Stable," indicating moderate safety.
• Minimum Investment: ₹10,000 (10 NCDs)
• NCD Allocation Ratio
• Institutional Investors: 10%
• Non-Institutional Investors: 40%
• Retail Investors: 50%

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Company Overview

KLM Axiva Finvest operates in four major business verticals:

• Gold Loans: Lending against household gold jewelry.
• MSME Loans: Financing small and medium-sized businesses.
• Personal Loans: Secured loans for individual needs.
• Microfinance Loans: Loans for women customers to support personal or business needs.

The company also offers two-wheeler loans for women customers. As of March 31, 2024, KLM Axiva Finvest managed an aggregate principal balance of ₹1,06,750.72 lakhs in gold loans and operated through 670 branches across six states, including Kerala, Karnataka, Tamil Nadu, Telangana, Andhra Pradesh, and Maharashtra.

Financial Performance

• Revenue Growth: 15.41% increase, reaching ₹315.92 crore in FY 2024.
• Profit Growth: 25.63% increase, with PAT at ₹23.03 crore in FY 2024.
• Assets: Grew from ₹1,719.30 crore in FY 2023 to ₹1,960.34 crore in FY 2024.

Strengths

• Diverse Product Portfolio: Offers gold, MSME, personal, and microfinance loans.
• Robust Growth in AUM: Gold loans, MSME loans, and microfinance AUM grew at impressive CAGRs of 30.59%, 13.28%, and 47.46% respectively (FY 2022-24).
• Extensive Distribution Network: 670 branches across six states with a strong rural and semi-urban focus.
• Experienced Management: Backed by skilled professionals and an experienced leadership team.

Weaknesses

Moderate Credit Rating: BBB ratings indicate moderate safety and carry some credit risk.
Geographic Concentration: Operations limited to six states, leading to potential over-dependence on specific regions.
Dependency on Borrowings: High reliance on borrowings for business expansion and operational funding.

Strategies for Growth

Geographic Expansion: Increasing presence in rural and semi-urban areas to tap underserved markets.
Focus on Core Segments: Strengthening gold loans and microfinance portfolios, which exhibit high growth potential.
Adopting Advanced Technology: Streamlining loan appraisals and risk management through advanced systems.
Strengthening Risk Management: Enhancing processes to minimize defaults and ensure steady returns.

Why Invest in KLM Axiva Finvest NCD?

Investors may find KLM Axiva Finvest NCDs appealing due to:

• Attractive Returns: Competitive coupon rates with yields up to 11.30%.
• Secured Nature: NCDs are backed by tangible assets, ensuring safety.
• Diverse Tenor Options: Suitable for investors with varying investment horizons.
• Growing Business Model: Strong financial growth and increasing AUM in key loan segments.

Conclusion

KLM Axiva Finvest’s November 2024 NCD issue provides a lucrative investment opportunity, combining secured returns with flexible tenors. However, investors should carefully assess the credit risks and geographic concentration before making a decision. With a focus on rural expansion and product diversification, KLM Axiva Finvest is well-positioned for long-term growth, making it a compelling choice for risk-aware investors seeking stable returns.