ECL Finance Tranche-I NCD July 2018 Issue Review (Apply)

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• 4th debt offer by ECLFL since Jan 2014.
• Allotment on First come - First Served basis.
• AA/Stable ratings by CRISIL and ICRA.

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.

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 its fourth debt offer (since January 2014) under Tranche-I with a Secured Redeemable Non-Convertible Debentures of Rs. 1000 each for Rs. 500 crore with a green shoe option to retain oversubscription to the tune of Rs. 1500 crore making the total issue size of Rs. 2000 crore. Issue opens for subscription on 24.07.18 and will close on or before 16.08.18. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple 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. Issue is jointly lead managed by Axis Bank Ltd. and Edelweiss Financial Services Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue. Beacon Trusteeship Ltd. is the debenture trustee.

These NCDs have tenures of 3 yrs, 5 yrs and 10 years. It offers coupon rates ranging from 9.25% to 9.85% based on selection of investors. Frequency of interest payments will be Monthly, Annually or cumulative as per the choice of investors. This issue has no Put and Call options. It also has a floating interest rate option available under Series VIII of this issue for 3 year term only. Floating rate interest on such NCDs is total of Reference Overnight MIBOR on an annualized basis plus the fixed spread of 2.50%.

Allotment will be made on 'first come-first served' basis. Allotment of these NCDs will be in dematerialized mode only.

As on March 31, 2018 it had a total of 102 branches. Its total loan book stood at Rs. 22008 crore as on 31.03.18. On the said date, its capital adequacy ratio was 17.09% against RBI stipulated minimum requirement of 15%. As at 31.3.18 its gross NPA were 1.82% as a percentage of 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 8.27 from 7.58 at present. Company posted net profits of Rs. 246.06 cr. (FY16), Rs. 384.93 cr. (FY17) and Rs. 479.56 cr. (FY18).

Conclusion / Investment Strategy

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

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