Kosamattam Finance - One of the Golden NBFCs

Bond Opportunities
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Starting a thread on Kosamattam Finance since they’ve been fairly active in the NCD market and a lot of their paper shows up frequently in high-yield lists. Went through their FY25 annual report and thought I’d summarise what I found. Would love inputs from members who track gold-loan NBFCs closely.

Kosamattam is one of the older gold-loan NBFCs, mostly concentrated in Kerala, but with presence across other southern states as well. Their book is almost entirely gold loans — the AR states 99%+ of the lending portfolio is gold-backed. That’s the comfort as well as the concentration risk.

From the FY25 numbers, the company’s loan book stands at ~₹5,688 crore and total borrowings are around ₹5,281 crore. Net worth is approximately ₹1,062 crore. Secured NCDs form a significant chunk of their liabilities — roughly ₹2,244 crore worth of secured NCDs outstanding. Capital adequacy is reported at 18.78%, which is fine for a gold-loan focused NBFC.

Since this is a gold-loan model, the usual questions apply:
collections are usually strong because of the collateral, but the flipside is the geographic clustering in Kerala and nearby southern states. If there’s any localised disruption — floods, political issues, or economic slowdown in that region — lenders with heavy regional exposure feel it quickly

What I’m trying to understand:

  1. How comfortable do investors feel with a gold-loan NBFC that is this concentrated in Kerala/southern India?

  2. Anyone tracking Kosamattam’s listed NCDs: how has secondary trading been in the last year? Any delays, interest quirks, or trustee updates worth noting?

  3. For people who’ve tracked the gold loan industry longer — how do auctions usually play out in Kerala? What % of principal do lenders typically recover?

  4. Kosamattam isn’t as widely followed as Muthoot/Manappuram — any governance or management red flags people have noticed over the years?

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Just adding a quick thought on the recent jump in gold prices and how it plays out for gold-loan NBFCs like Kosamattam. In general, rising gold prices are usually a tailwind. When the underlying collateral becomes more valuable, the same gram of gold supports a bigger loan, so borrowers can top up or renew without bringing in additional jewellery. NBFCs usually see higher disbursement momentum in these periods.

Asset quality also tends to look better when gold is rising. Borrowers are less willing to risk losing the ornament if the value has gone up meaningfully, so collections behave well and auction activity stays low. Recovery from auctions, if they do happen also improves because the gold itself fetches more.

So, in the short term, higher gold prices help both growth and credit metrics. The only thing to watch is what happens if prices correct after a sharp run-up. That’s when LTV buffers shrink and NBFCs have to act faster, sometimes forcing auctions. Historically the bigger players (Muthoot/Manappuram) manage it well, but smaller region-focused names can feel the volatility more. For now though, the trend should mostly be positive for lenders like Kosamattam.