11% KLM Axiva Finvest NCD – Sep-22 – Should You Subscribe?

KLM Axiva Finvest presents a secured NCD issue, which will close on 15th September 2022. KLM Axiva Finvest is a systemically important non-deposit-taking NBFC in India. KLM Axiva Finvest NCD interest rates are up to 10.75% and the yield is up to 11.02%. Your money would double in 82 months. Should you invest in KLM Axiva Finvest NCD 2022? What are the risk factors to consider before investing in the KLM Axiva NCD 2022 edition?

Also read: If the auto sector is booming, should you invest in the ICICI Pru Nifty Auto Index Fund?

About KLM Axiva Finvest Limited

They are a non-deposit-taking, non-systemically important, non-bank finance company primarily serving low- and middle-income individuals and businesses that have limited or no access to formal banking and financial channels. They are mainly active in four business areas:

(i) Gold lending, money lending against pledging of household jewellery

(ii) Loans for micro, small and medium-sized enterprises

(iii) personal loans and

(iv) Microfinance loans to clients.

KLM Axiva Finvest NCD issue details

Opening date of KLM Axiva NCD 15 Sep 22
Closing date of KLM Axiva NCD 12 Oct 22
security_level Secured, redeemable and converted NCDs
Output size (base) Rs 100 crores
Output size (shelf) Rs 100 crores
issue price Rs 1,000 per bond
face value Rs 1,000 per bond
minimum lot size 5 bonds and then 1 bond
tenure 400 days to 5 years
series Series I to X
interest payment frequency Monthly, yearly and on due date
entry BSE – Within 6 working days

NRIs cannot relate to this NCD subscription.

Vivro Financial Services is the lead manager for the issue.

KLM Axiva Finvest NCD prospectus dated 22 September

KLM Axiva Finvest NCD interest rates

KLM Axiva Finvest NCD (KLM Axiva NCD) interest rates for the September 22 issue

How is the NCD assigned?

So the NCDs would allocate to the investors.

Allocation to Retail Clients 50%
Allocation to institutional investors 10%
Allocation to non-institutional investors 40%

KLM Axiva Finvest NCD 2022 reviews

The secured NCDs are rated Ind BBB- by Ind Ratings and Research; Stable.

CARE’s rating of NCDs indicates that instruments with this rating have a medium risk of failure to meet financial obligations on time.

KLM Axiva Finvest NCD – Are these secured NCD bonds?

These are senior secured bonds.

The NCDs would represent secured liabilities of the company and have a senior equal encumbrance with existing secured creditors for all movable assets, including book debts and receivables, cash and bank balances, other movable assets, loans and advances, of both current and future corporations the one-off value of the outstanding NCDs plus accrued interest thereon.

What about the company’s profit?

Its standalone gains are as follows:

Year ended March 2020 – Rs 50.6 lakhs

Year ended March 2021 – Rs 705.8 lakhs

Year ended March 2022 – Rs 1,138.3 lakhs

How are returns taxed?

Since you only need to apply via the Demat form, there is no TDS deduction on the interest paid on these NCDs. It does not matter whether the company would deduct TDS or not, you must declare the NCD interest as income on your income tax return and pay income tax based on your individual tax bracket.

KLM Axiva Finvest NCD 2022 – Why invest?

1) The company has had consistent and improving margins over the past few years. This indicates that this company is able to consistently pay interest rates to its creditors or NCD holders.

3) These NCDs offer attractive interest rates where you can earn a return of up to 11.02% per year.

4) It issues Secured NCDs. In the event of the company defaulting and the company closing for any reason, NCD investors would be given preference in repaying the principal along with the interest. Hence, it is safe to invest in such secured NCD options. However, preference will only be given to NCD investors and there is no guarantee that the full amount will be returned in such cases.

KLM Axiva Finvest NCD 2022 – Why not invest?

1) The company’s NPA is high recently. While the current FY22 net NPA is 2.7%, the FY21 net NPA was 4.68% and FY20 net NPA was 5.97%.

2) They have received a show cause notice from RBI and any adverse action being taken could impact their business and operations.

3) The Company, its promoter and directors and its affiliated companies have been searched and seized by the Indian Income Tax Authorities.

4) Its financial performance is particularly vulnerable to interest rate fluctuations. If they are unable to manage interest rate risk in the future, the net interest margin could be adversely affected, thereby adversely affecting the Company’s business and financial condition.

5) Its operations require significant capital and any disruption to its funding sources would have a material adverse impact on its liquidity and financial position.

6) High levels of customer defaults or delays in loan repayments could adversely affect business, financial condition and results of operations.

7) If they are unable to manage the level of NPAs in their loan assets, their financial condition and operating results may suffer.

8) Additional internal and external factors can be found in the “Risk Factors” section of the NCD prospectus.

How to apply the KLM Axiva NCD September 2022 Edition?

KLM Axiva Finvest NCD September 2022 Edition is available in demat form only. You can apply online or through any of the broker websites where you hold a demat account. The complete form can be downloaded from the Lead Manager’s website. You can find more information on this in the prospectus.

Also read: LIC Neue Rente Plus ensures guaranteed growth – should you invest?

Is KLM Axiva NCD safe?

KLM Axiva NCDs are rated BBB-/Stable by Ind Ratings. NCD bonds with such ratings are considered risky.

KLM Axiva NCD Review – Should You Invest?

KLM Axiva Finvest offers secured NCDs that offer high interest rates of up to 10.75% and a yield of up to 11.02%. If banks offer low interest rates, you would be tempted by the interest rates on KLM Axiva NCD bonds.

These bonds have a low credit rating of BBB-Stable by Ind Ratings, which represents a high level of risk. Their capital could be at risk if such an NBFC company encounters a financial crisis.

In view of the low credit rating, investors can now avoid such NCD bonds. You can invest in A/AA/AAA rated bonds that come into the market every now and then.

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