Muthoot Capital Bonds

Muthoot Capital Services Limited (MCSL) is an RBI-registered NBFC and a part of the Muthoot Pappachan Group. Its NCDs are secured, redeemable and listed offering a fixed coupon rate of 10% p.a., with a monthly interest payment frequency. The NCDs have a maturity date of 17 June 2027 and a face value of Rs 1 lakh. The specific series is rated A+ (Stable) by ICRA Limited. The NCDs, subject to the applicable terms and conditions.

Those who are willing to invest in Muthoot Capital Bonds can invest through Paisabazaar app by following the below steps: 

Step 1- Open your Paisabazaar app.

Step 2- Click on ‘Bonds’ under ‘Investment Products’ section.

Step 3- Complete your KYC by verifying your email address.

Step 4- Add your bank details, personal information and e-signature etc.

Step 5- Link your Demat Account to start investing in Muthoot Capital Bonds.

• Muthoot Capital Bonds offer a return (YTM) of up to 9% p.a. 
• The bonds are listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), meaning they provide liquidity for investors to sell in the stock market.  
• These bonds offer monthly payout options, offering investors a steady stream of passive income. 
• The bonds are senior secured, meaning they give investors higher repayment priority and are backed by the issue’s assets.

ICRA Analytics Limited has been assigned an A+ Stable outlook rating to Muthoot Capital Services Limited on 17 Feb 2025. The A+ rating indicates a ‘high degree of safety’ regarding the timely payment of financial obligations. This means that the company carries a low credit risk, indicating that it is likely to pay back its debts and interest on time. 

ICRA considers several factors to assign a credit rating to Muthooth Capital, such as its adequate capital structure, liquidity profile and strong support from its parent company, i.e., Muthoopt Pappachan Group (MP Group). The credit rating expects that the MP group will help whenever the company needs it in the future.

Credit Strength

As per the ICRA report, Muthoot Capital Services Limited (MCSL) has maintained a capital adequacy ratio of 23.2%, a net worth of Rs 652 crore and managed gearing of 3.9 times as of December 2024, with gearing expected to remain below 5 times during its growth phase. Moreover, the credit rating agency expects the company to raise equity capital to support future AUM growth.

Credit Challenges

MCSL’s AUM growth remained subdued at around Rs. 2,000 crore during FY2021-FY2024 due to pandemic-led asset quality issues but improved to Rs. 2,833 crore as of December 2024, with the company targeting 35-45% CAGR over the medium term. However, the portfolio remains concentrated in two-wheeler loans and southern India, accounting for 91% and 51% of AUM, respectively, as of December 2024. 

Asset quality improved, with GS-3 declining to 4.7% from 22.2% in March 2023, supported by the sale of stressed loans to ARCs. Profitability also improved to 4.6% in FY2024 from -6.1% in FY2022, but declined to 1.8% in 9M FY2025 due to margin pressure from the increasing share of low-yielding co-lending loans, while credit costs rose to 0.1% of AMA from -3.4% in FY2024. ICRA expects that maintaining asset quality, improving margins, and controlling credit costs amid the planned growth remain monitorable.

• Muthoot Capital is a publicly listed NBFC on BSE and NSE, which means investors can buy or sell in the secondary market. 
• MCSL Bonds have a higher degree of safety, which means they have a low credit risk. 
• These bonds fall under the senior secured category, i.e., investors have a right of claim to the MCSL’s underlying assets, providing a layer of security. 
• Muthoot Capital has strong parental company support of Muthoot Pappachan Group (Muthoot Blue), which includes flagship entities like Muthoot FinCorp Limited, Muthoot Microfin Limited, Muthoot Housing Finance Company Limited, etc.  

Muthoot Capital Bonds can be redeemed by investors through stock exchanges (BSE & NSE) or by contacting their broker. 

Muthoot Capital Service Limited (MCSL) is an RBI-registered NBFC and a member of the well-known Muthoot Pappachan Group. The MCSL was listed on the BSE in April 1995 and on the NSE in August 2015. As an NBFC within the Group, it provides retail finance products, primarily two-wheeler loans, as well as financing for used cars, three-wheelers, and other commercial vehicles (CVs). It also provides fixed deposits. As of December 2024, the company operated 338 districts in 22 states.        

Key Financial Indicators- (audited; Ind-AS)

All ratios as per ICRA calculations; Amount in Rs. crore

Financial Covenants 

Muthoot Capital Services Limited has 7 board of directors, in which 4 are independent directors.  

Executive & Senior Leadership of the Company

• Tina Suzanne Muthoot - Executive director
• Susan John- Non-executive director
• Ritu George Muthoot- Non-executive director
• Ms. Manimekhalai A- Independent director
• Mrs. Shirley Thomas- Independent woman director
• Mrs. CA. Divya Abhishek- Independent director
• Mr. Robin Tommy- Independent Director 

Muthoot Capital Bonds come with two types of risk, which are described further: 

General Risks

• Credit Risk- The bonds are rated A+/Stable by ICRA. However, the credit rating agency may downgrade the rating if the company's financial position or creditworthiness deteriorate

• Liquidity Risk- Although the company is listed on the BSE & NSE, the NCDs can be difficult to sell before maturity due to limited liquidity in the market. Therefore, investors should be prepared to hold them until maturity to get their money back.

• Interest Rate Risk- The bond prices and market interest rates usually have an inverse relationship. When the market interest rates rise, the bond prices may fall and vice-versa. It is important for investors to consider this risk, especially if they plan to sell their bond holdings before maturity.

Specific Risks

• The company's financial condition and operations may be adversely affected if it is unable to control non-performing assets (NPAs) or if its loan-loss reserves are insufficient to cover future loan losses. Due to microfinance exposure and stress in corporate, the Gross Net-Performing Asset (GNPA) has decreased to 6.96 in FY26.
  

• The issuer of the bond does not give the assurity of your full investment recovery in the case of company default.
  
• The issuer operates only in India and thus, has a higher dependency on the Indian market, making its performance vulnerable to economic slowdowns. Lower growth could reduce credit demand, increase defaults and adversely impact its business, financial performance and condition.