Review: Manappuram Finance NCD issue can be consideredGold loan company Manappuram Finance Limited (MNFL) is coming out with a public issue of Secured Redeemable Non-Convertible Debentures (NCDs) of face value of Rs.1,000/- each amounting to Rs.200 crore (base issue) with an option to retain over subscription amount upto Rs 1,000 crore (shelf limit). The issue has opened for subscription on 24th Oct’18 and will close on 22nd Nov’18. Should you buy? Yes, of course. Read on to know why.

Company details

Manappuram Finance is one of the major NBFC players in the gold finance business in India. MFL provides loans against the pledge of household and/or used gold jewellery and provide short-term personal and business gold loans primarily to retail customers.

It has been in the gold loan financing business since 1999. Historically, the company has also provided other related services, including asset finance, money transfer and foreign exchange, sales of gold coins and business and personal lending.

MFL’s lending functions are supported by an in-house, custom developed information technology platform that allows them to, among other things, record relevant customer details, approve and disburse the loan. The technology platform also handles internal audit, risk monitoring and management of the relevant loan and pledged gold related information. MFL’s Gold Loan customers are largely individuals from rural, semi-urban areas and metro cities, including, Mumbai, Delhi, Chennai and Bengaluru, who typically require funds for social obligations, emergencies, agriculture-related activities, small scale business operations or consumption purposes.

The issue

The company’s NCDs are offering 9.6% to 10.4% interest rate. This is far higher than any bank deposit rate for comparable tenure.

Please refer to the following table for the exact NCD interest rate for specific tenure.

Manappuram Finance NCD


Gold loan firms like MFL regularly need money. Coming to the public with an NCD issue is their way of garnering required funds at lower costs. Banks are slowly becoming reluctant about lending to NBFCs amid the IL&FS fall out.

Expect more such NBFCs to come with attractive offers. Manappuram’s NCD offering has been rated BWR AA+/Stable and CARE RATINGS AA Stable. These are not bad ratings. The interest rate offered is in sync with these ratings. Manappuram is a pure gold loan play and its bad loans are a minute portion of overall book. There is no alarming trend.

Retail Individual Investors ie Resident India individuals and Hindu Undivided Families through the Karta applying for an amount aggregating up to and including Rs 10,00,000 across all options of NCDs in the Tranche I Issue can apply.

Allotment will be on first come and first serve basis.

RupeeIQ take – Manappuram NCD is an interesting option for diversifying your fixed income portfolio. It’s interest rates are very attractive. But do not allocate more than 10 per cent of your fixed income portfolio to one issuer.

Disclaimer: Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on