Muthoot Finance April 2023 NCD Public Issue Review

Muthoot Finance Ltd is launching its public issue of NCDs to raise funds from the debt market. Read further to know more about the business of Muthoot Finance Limited.

IssuerMuthoot Finance Ltd
Type of InstrumentListed, Secured, Redeemable, Non-Convertible Debentures
Issue Size (Tranche I)Rs. 75 crs + Rs. 225 crs (Green shoe option)
Face ValueRs. 1,000
Tenure25 months to 61 months across Series I-VII
Yield7.75% to 8.60% across Series I-VII
Application sizeMinimum 10 NCDs and in multiples of 1 NCD thereafter
Security CoverMinimum 100% security cover or higher on the principal outstanding plus interest thereon
Credit RatingICRA AA+/Stable
Issue Open Date12-Apr-23
Issue Close Date26-Apr-23

While here you can earn up to 8.25% for 25 months tenure, in the secondary market you can earn an yield of 8.60% for shorter tenure of ~8 months for other bond issuance of Muthoot Finance. For more details, check out our asset page.

About Muthoot Finance Limited:

Muthoot Finance Ltd (“MFIN”) is the largest gold loan NBFC in India. MFIN is an “Upper Layer NBFC” (NBFC-UL) headquartered in the south Indian state of Kerala. It has been operating since 1939 when M George Muthoot (the father of current Promoters) founded the company. It provides loans secured by gold jewellery, ornament, etc for personal or business purpose to individuals who are not able to access credit or are in urgent need of money. 

On a standalone basis, MFIN has a loan AUM of Rs. 57,731 crs as of December 2022 across 29 states and 4,600+ branches. It has an active customer base of 52.33 lakhs and 81.05 lakhs loan accounts as of December 2022. For the years ended March 31, 2020, 2021 and 2022 its revenues from gold loan business constituted 96.81%, 95.88% and 96.67% respectively of the total income. 

 About Muthoot Group:

The corporate structure of Muthoot Finance mentioned below:

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In 1939, M. George Muthoot created a partnership firm under the name of Muthoot M. George & Brothers (MMG). MMG was a chit fund based out of Kozhencherry. In 1971, the firm was renamed as Muthoot Bankers, and started to finance loans using gold jewellery as collateral. In 2001, the company was renamed to Muthoot Finance. Muthoot Finance falls under the category of systematically important non-banking financial company(NBFC) of the RBI guidelines. As of December 2022, the promoters hold 73.35% of the equity stake in the company.

Muthoot Finance Ltd is the Flagship Company of the group. The group companies are engaged in various financial activities as elaborated below:

Company NamePrimary BusinessDate of Incorporation
Muthoot Finance LtdGold Loans14-Mar-97
Muthoot Homefin (India) LtdAffordable Housing Finance26-Aug-11
Belstar MicrofinanceMicrofinance11-Jan-88
Muthoot Money LtdVehicle Finance13-Dec-94
Asia Asset Finance PLCListed Diversified NBFC in Sri Lanka23-Sep-70
Muthoot Insurance Brokers Pvt LtdInsurance Broking23-Jan-02
Muthoot Asset Management Pvt Ltd 14-Jan-19
Muthoot Trustee Pvt Ltd 28-Jan-19

Gold Loan Industry:

Gold loans (also known as loans against gold) refer to short-term loans sanctioned by banks, non-banking financial companies (NBFCs) and other lenders against the pledge of gold ornaments and jewellery and are popular with farmers looking to meet agricultural expenses and individuals or households who need to meet planned or unplanned expenses. Indians regard gold as a vital symbol of social status, financial security, and intergenerational legacy, and such is the emotional and cultural attachment to gold that households prefer to use gold as collateral for financing for key life goals like healthcare, farming, small business, education, and weddings, rather than liquidate the metal outright for cash.

The gold loan is therefore a historically popular instrument, and the overall gold loan market consists of the organised sector (with regulated players such as banks, NBFCs, and Nidhi companies) as well the unorganised/informal finance sector (run by pawnbrokers and moneylenders). The World Gold Council (WGC) estimates that the overall gold loan market (organised and unorganised) in India has grown from Rs. 600 billion in FY2009-10 to Rs. 9,000 billion in FY2019-20, at a CAGR of 31.1 per cent. 

Company Financials (Standalone):

Net Worth (₹ in Cr)20,13918,34517,41211,572
Borrowings (₹ in Cr)44,30549,87046,02037,226
AUM (₹ in Cr)57,73158,05352,62241,611
PAT (₹ in Cr)2,5713,9543,7223,018
Debt to Equity2.20x2.72x2.64x3.22x
Tier I Capital32.41%29.10%26.36%24.30%
Tier II Capital0.88%0.87%1.08%1.17%

Company Financials (Consolidated):

Net Worth (₹ in Cr)21,11819,13815,76012,001
Borrowings (₹ in Cr)49,55951,42950,39740,935
AUM (₹ in Cr)65,08564,49458,28046,871
PAT (₹ in Cr)2,6614,0313,8193,169
Debt to Equity2.35x2.69x3.20x3.41x


Nature of BorrowingsAmount (₹ in Cr)%
Secured47,765 95.78%
Unsecured2,105 4.22%
Total49,870 100.00%
Type of BorrowingsAmount (₹ in Cr)%
Secured Non-Convertible Debentures (Muthoot Gold Bonds)                           219 0.44%
Secured Non-Convertible Debentures – Listed12,303 24.67%
Borrowings from Banks/FIs                     27,663 55.47%
External Commercial Bonds- Senior secured Notes                       7,579 15.20%
Subordinated Debt – Listed                           143 0.29%
Commercial Paper                           989 1.98%
Other Loans                           973 1.95%
Total49,870 100.00%

Top 10 Debenture holders as on January 20, 2023:

S. No.Name of holderAmount (₹ in Cr)% Of NCD outstanding
1SBI Mutual Fund1,214.249.70%
2HDFC Trustee1,053.008.41%
3NPS Trust- A/C ICICI Prudential Pension Fund Scheme C – Tier 1785.006.27%
4State Bank of India500.003.99%
5Aditya Birla Sun Life Trustee Private Limited380.003.03%
6ICICI Prudential Mutual Fund321.262.57%
7SBI Life Insurance co. Ltd303.332.42%
8Kotak Mahindra Trustee Co. Ltd300.522.40%
9Union Bank of India275.002.20%
10Star Health and Allied Insurance co. Ltd,207.051.65%

Peer Comparison (December 2022):

ParticularsMuthoot FinanceManappuram FinanceIIFL Finance*
AUM (₹ in Cr)57,73118,61429,718
Net Worth (₹ in Cr)20,1398,7224,926
Debt to Equity2.20x2.23x3.01x
PAT (₹ in Cr)2,571957536
PAT margin33.81%26.50%16.12%

*Gold loan forms approximately 62% of IIFL’s total AUM as of December 2022. Rest is contributed by business loans, construction & real estate finance and capital market finance.

Rating AgencyMuthootManappuramIIFL
ICRAAA+/StableNot ratedAA/Stable
CARENot ratedAA/StableAA/Stable


  • Muthoot Finance is the leading gold loan NBFC in India
  • More than 95% of the loan portfolio is secured by gold which is a highly liquid asset
  • The asset quality is comfortable with GNPA at 2.58% and NNPA at 2.31% as of December 2022
  • The company is adequately capitalised with Capital Adequacy ratio of 33.29% as of December 2022


  • Most of the loan portfolio is concentrated in South India (47% as of December 2022)
  • Moderation of growth in business in the recent past
Vinit Kulkarni - Investment Analyst - Wint Wealth
Credit Principal at Wint Wealth
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The article may also contain information which are the personal views/opinions of the authors. The information contained in this article is for general, educational and awareness purposes only and is not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision, whether related to investment or otherwise, taken on the basis of this article.

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