ECL Finance Dec. 2018 Tranche I NCD offer review (Subscribe)

•    ECLFL brings 5th debt offer since 2014.
•    This time it has higher coupon rates based on the market scenario.
•    Instrument rated as ICRA/AA (Stable) and CRISIL/AA (Stable).
•    It is offering three tenures for current offer.

ABOUT COMPANY:
ECL Finance Ltd. (ECLFL) is an Edelweiss group's finance sector arm. ECLFL 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 customized to suit the needs of the corporates, SMEs and individuals. Off late it has turned frequent visitor for debt market with its offers. It is coming out with its 5th debt offer since January 2014. Edelweiss Group enjoys a large client base of over 11,24,000 clients as on September 30, 2018, from retail and wholesale segments across its various businesses. Edelweiss has 475 offices being 467 domestic offices across 200 cities in India and eight offices outside India in six international cities as on September 30, 2018.

DEBT OFFER DETAILS:
For the purpose of onward lending and repayment of interest and principal of existing loans (75% of fund mobilized) as well as general corpus fund need (25% of fund mobilized), ECLFL is coming out with Tranche-I of Secured Redeemable Non-Convertible Debentures of Rs. 1000 each for Rs. 250 crore with a green shoe option to retain oversubscription to the tune of Rs. 750 crore making the total issue size of Rs. 1000 crore. The company has an overall shelf limit of Rs. 2000 cr. The issue opens for subscription on 13.12.18 and will close on or before 11.01.19. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (i.e. Rs. 1000) thereon, thereafter. Post allotment, NCDs will be listed on BSE and NSE.

This issue is rated as CRISIL AA/Stable by CRISIL and ICRA AA/Stable by ICRA. This rating indicates that instruments with such ratings are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.  The issue is jointly lead managed by IIFL Holdings Ltd., Edelweiss Financial Services Ltd. and Axis Bank Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. Beacon Trusteeship Ltd. is the debenture trustee.

These NCDs have tenures of 39 months, 60 months and 120 months. It offers coupon rates ranging from 9.95% to 10.60% based on the selection of investors. The frequency of interest payments will be Monthly, Annually or cumulative as per the choice of investors. This issue has no Put and Call options Allotment will be made on "first come-first served" basis. Allotment of these NCDs will be in dematerialized mode only. The application is to be made through ASBA mode only.

FINANCIAL DATA:
As on Sept 30, 2018, it had a total of 117 branches. Its total loan book stood at Rs. 27096 crores. As on 30.09.18, its capital adequacy ratio was 15.87% against RBI stipulated minimum requirement of 15%. For H1 of FY19, it has posted a net profit of Rs. 255.74 cr. on total revenue of Rs. 1987.52 cr.

As at 30.09.18, its gross NPA was 1.82% as a percentage of the total loan book and net NPAs were 0.75% for the said date. For FY16 and FY17, its net NPAs were 0.49% and 0.64% respectively. Post issue its debt-equity ratio will stand increased to 8.24 from 7.66 as on 30.09.18. The company posted net profits of Rs. 246.06 cr. (FY16), Rs. 384.93 cr. (FY17) and Rs. 479.56 cr. (FY18).


Conclusion / Investment Strategy

Investors looking for steady regular income may consider investment for long term in this AA/Stable rated NCD issue.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Dec 6, 2018

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 Dec 2018 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 Dec 2018 worth investing. The ECL Finance NCD Dec 2018 Note sets the NCD expectations in systematic way which tells you if ECL Finance NCD Dec 2018 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in ECL Finance NCD Dec 2018 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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