Prachay Capital Ltd NCD — Review

About Prachay Capital Limited: Core Identity & Structure Regulatory Status: An RBI-registered, non-deposit-taking NBFC-ICC (Investment and Credit Company) under the Base Layer category (Registration No. N-13.02198, dated Oct 7, 2024). Ecosystem: Operates an integrated financial platform alongside its wholly-owned subsidiaries, PSPL and PIMPL. Capabilities: Together with its subsidiaries, it manages everything from private credit and corporate bonds to debt-focused Alternative Investment Funds (AIFs), investor servicing, and in-house depository functions (like account opening, pledging, and securities credit). The Dual-Sided Business Model Prachay Capital operates as an intermediary bridging the gap between investors seeking high yields and mid-sized businesses looking for growth capital. The Liability Side (Sourcing Capital): They raise funds by issuing High-Yield Fixed Income (HYFI) securities targeted at investors and corporates with surplus capital, aiming to institutionalize HYFI as a distinct asset class. The Asset Side (Deploying Capital): They provide private credit and corporate bond solutions to mid-sized businesses that are generally underserved by traditional banks and debt markets, helping them fund expansion or working capital. Subsidiaries: Prachay Securities Private Limited (bond platform "Bondsmart") and Prachay Investment Managers Private Limited (AIF management). Promoter: Girish Murlidhar Lakhotiya (holds ~74.93% equity). Promoter Group holding: ~97.83% of equity shares. AUM growth: ₹28,569.77 lakh (FY24) → ₹44,485.54 lakh (FY26) – CAGR ~24.78%. Gross NPA: Zero as of March 31, 2026. CRAR: 25.64% as of March 31, 2026 (above regulatory minimum of 15%). ⚠️ Key Risk Factors (Highlights) Capital intensive business – disruption in funding could hurt liquidity. Interest rate risk – mismatches between asset yields and liability costs. High concentration risk – ~97.5% of AUM in commercial real estate, ~85.5% in Maharashtra. Brand ownership – trademark "Prachay" is owned by the Promoter, not the company. High debt-equity ratio – 3.09:1 as of March 31, 2026 (post-issue indicative 3.96:1). Negative operating cash flows due to loan disbursements (FY26: ₹(9,060.54) lakh). Promoter group pledged shares – 31,25,500 equity shares pledged against ORCDs issued by the group entity. No DRR (Debenture Redemption Reserve) – NBFCs are exempt. Security enforcement risk – recovery depends on the realizable value of receivables. This is a "Callable Bond" – the Company can force you to sell back the NCDs after 1 year at par value