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ECL Finance NCD Tranche-I (May 2019) offer review (Subscribe)

  • This is the 6th debt issue from EFL since January 2014.
  • Offer rated CARE AA/Positive and CRISIL AA/Stable
  • Group is fancied by investors for investment options.
  • Investors looking for long term steady returns may consider for parking of funds.

ECL Finance Ltd. (EFL) is off late a frequent visitor to the debt market with its NCD offers. So far it has mobilized funds via debt route for five times since January 2014. It is a 100% subsidiary of EFSL.

EFL is one of the leading systemically important non-deposit taking NBFCs, focused on offering a broad suite of secured corporate loan products, retail loan products which are customised to suit the needs of the corporates, SMEs and individuals. As on March 31, 2019, it has a total of 119 branches.

Edelweiss Group enjoys a large client base of over 11,41,000 clients as on December 31, 2018, from retail and wholesale segments across its various businesses. Edelweiss has 476 offices being 468 domestic offices across ~200 cities in India and eight offices outside India in six international cities as on December 31, 2018.

It is a part of the Edelweiss Group which is one of India's prominent financial services organization having businesses organized around three broad lines – credit including retail finance; franchise & advisory businesses including wealth management, asset management, capital markets, balance sheet management and others, and insurance business. The product/ services portfolio of the Edelweiss Group caters to the diverse investment and strategic requirements of corporate, institutional, high net worth individuals and retail clients. Edelweiss Group has a pan India presence with a global footprint extending across geographies with offices in New York, Mauritius, Dubai, Singapore, Hong Kong and the UK. EFSL is listed on BSE and NSE. EFSL through its subsidiaries offers to its customers a diversified financial services platform that provides various secured corporate loan products, retail loan products and services, SME financing, agri value chain services including agri credit, wealth advisory services, asset management, insurance, investment banking, institutional and retail broking.

 

Series

I

II

III**

IV

V

VI

VII

VIII

IX

Frequency of Interest Payment

Annual

Cumulative

Annual

Cumulative

Monthly

Annual

Cumulative

Monthly

Annual

Minimum Application

Rs 10,000 (10 NCDs) across all Series

Face Value/Issue Priceof NCDs (Rs/NCD)

Rs 1,000

In Multiples of thereafter

Rs 1,000 (1 NCD)

Tenor

24 months

24 months

39 months

39 months

60 months

60 months

60 months

120 months

120 months

Coupon (% per annum) for NCD Holders in Category I, II, III & IV

9.90%

NA

10.20%

NA

9.95%

10.40%

NA

9.95%

10.40%

Effective Yield (per annum) for NCD Holders in Category II, III and IV

9.90%

9.90%

10.20%

10.20%

10.42%

10.40%

10.40%

10.42%

10.40%

Mode of Interest Payment

Through various mode available

Amount (Rs/NCD) on Maturity for NCD Holders in Category I, II, III & IV

1,000

1,208.11

1,000

1,371.81

1,000

1,000

1,640.90

1,000

1,000

ISSUE DETAILS:

EFL is coming with its 6th NCD offer of ₹150 crores with a green shoe option to retain oversubscription to the tune of ₹150 crores, thus making a total issue size of ₹300 cr. It has a shelf limit of ₹2000 crore for the ongoing offer. It is issuing Secured Redeemable Non-Convertible Debentures having a face value of ₹1000 each. The issue opens for subscription on 10.05.19 and will close on or before 07.06.19. Minimum application is to be made for 10 NCDs (i.e. ₹10000) and in multiples of 1 NCD (i.e. ₹1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE. EFL is spending around ₹9.8 crores for mobilizing funds under Tranche-I.

Net proceeds of the issue will be utilized for the purpose of onward lending, financing, and for repayment /prepayment of interest and principal of borrowings of the Company (up to 75%) and for general corpus fund (up to 25%).

The issue is jointly lead managed by Axis Bank Ltd. and Edelweiss Financial Services Ltd., while Link Intime India Pvt. Ltd. is the registrar and Beacon Trusteeship Ltd. is the debenture trustee.

The issue is rated CARE AA/Positive by CARE and CRISIL AA/Stable by CRISIL. These ratings indicate that instruments with these ratings are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

This offer has tenure of 24 months, 39 months, 60 months and 120 months. It offers coupon rates ranging from 9.90% to 10.40%. Interest payment options are Monthly, Annually or Cumulative as per the choice of investors.

Allotment will be done on "First Come – First Served" basis" in demat mode only. Application is to be made through ASBA mode only.

Post issue EFL's current debt-equity ratio of 6.31 will stand enhanced to 6.86.

FINANCIAL PERFORMANCE:

Its current paid up equity capital of ₹213.83 cr. as on 31.12.18 is supported by free reserves of ₹Xx cr.

Total revenue and Total Comprehensive Income of the Company for the nine months ended December 31, 2018, was ₹30,417.99 million and ₹4,195.32 million, respectively. Total income and profit after tax (PAT) of the Company for the financial year ended March 31, 2018, was ₹30,600.27 million and ₹4,620.47 million, respectively. The Company's income from operations witnessed a CAGR of 39.32% from ₹8,122.76 million in FY2014 to ₹30,600.27 million in FY2018 and PAT witnessed a CAGR of 30.35 % from ₹1,600.44 million in FY 2014 to Rs.4,620.47 million in FY 2018. The Loan Book as per Ind GAAP of the Company has witnessed a CAGR of 37.84% from ₹60,959.79 million in FY2014 to ₹220,081.23 million in FY2018.

On a standalone basis, its net NPAs grew from 0.48% for FY16 to 0.75% for FY18.


Conclusion / Investment Strategy

Investors looking for steady long term fixed returns may consider investing in this debt offer from Edelweiss Group Company. (Subscribe).

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on May 9, 2019

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

The ECL Finance NCD April 2019 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if ECL Finance NCD April 2019 worth investing. The ECL Finance NCD April 2019 Note sets the NCD expectations in systematic way which tells you if ECL Finance NCD April 2019 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in ECL Finance NCD April 2019 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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