Image Source: KNN India
Paisalo Digital Ltd, a small-cap non-banking financial company backed by LIC, has approved the issuance of Non-Convertible Debentures (NCDs) aggregating up to ₹500 million. The decision, taken during the company’s Operations and Finance Committee meeting, marks a strategic step toward strengthening its funding base and improving liquidity amid signs of a stock recovery. The NCDs will be issued via private placement and are expected to attract institutional investors seeking stable returns in a volatile market.
This development comes as Paisalo’s stock begins to rebound from a prolonged slump, with analysts interpreting the move as a signal of financial stability and forward-looking capital planning. The issuance will be listed on the Bombay Stock Exchange and is structured to offer attractive yields with robust security cover.
Key Details Of The Debenture Issuance
• Paisalo will issue 5,000 secured NCDs, each with a face value of ₹1 lakh, totaling ₹500 million
• The debentures carry a coupon rate of 10 percent per annum, payable monthly
• Maturity is set at 24 months, with principal redemption at par
• The tentative allotment date is scheduled for May 22, 2025, subject to regulatory approvals
• The NCDs will be listed on BSE, ensuring tradability and transparency
Security And Investor Protection Measures
• The debentures will be secured by a pari-passu charge on hypothecated receivables
• A minimum security cover of 1.10 times the principal amount will be maintained
• In case of delayed payments, investors will receive an additional 2 percent per annum
• No special rights or privileges are attached to the instrument, ensuring uniform treatment
Market Sentiment And Stock Performance
• Paisalo’s stock has seen a 6 percent gain in May 2025, indicating early signs of recovery
• The stock had previously declined over 47 percent year-on-year, hitting a 52-week low of ₹29.75 in April
• Despite the rebound, it remains 57 percent below its July 2024 high of ₹81.95
• Analysts view the NCD issuance as a stabilisation strategy aimed at restoring investor confidence
LIC And SBI Life’s Stake Dynamics
• LIC currently holds 77.6 lakh shares in Paisalo, equating to a 1.17 percent stake
• Post-conversion of convertible securities, LIC’s stake may reduce to 1.03 percent
• SBI Life Insurance holds a 9.36 percent stake, projected to decline to 8.26 percent after conversion
• These shifts reflect broader institutional adjustments in response to capital restructuring
Strategic Implications For Paisalo Digital
• The NCD issuance supports Paisalo’s lending operations, especially in SME and co-lending segments
• It aligns with the company’s goal of diversifying funding sources beyond equity and commercial papers
• The move enhances liquidity and positions Paisalo to scale its loan book in underserved markets
• It also signals operational discipline and adherence to SEBI’s LODR regulations
Investor Outlook And Risk Considerations
• The 10 percent coupon rate is expected to attract risk-tolerant investors seeking monthly income
• Institutional buyers may find the secured structure and regulatory compliance reassuring
• However, the company’s recent stock volatility remains a factor in investor decision-making
• The NCDs offer a relatively short tenure, making them suitable for medium-term portfolio strategies
Looking Ahead: Strengthening The Balance Sheet
Paisalo Digital’s approval of ₹500 million in NCDs reflects a proactive approach to capital management and market positioning. With a secure structure, attractive yield, and clear regulatory alignment, the issuance is poised to support the company’s growth ambitions while offering investors a stable income stream. As the stock continues its recovery, Paisalo’s financial moves will be closely watched for signs of sustained momentum.
Sources: Times Now, DSIJ, MarketScreener
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