About Company/Group:
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 six 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 customized to suit the needs of the corporates, SMEs and individuals. As on June 30, 2019, it has a total of 120 branches.
Edelweiss Group enjoys a large client base of over 12,20,000 clients as on March 31, 2019, 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 March 31, 2019.
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.
Issue Details:
EFL is coming with its 6th NCD offer of Rs 100 crores with a green shoe option to retain oversubscription to the tune of Rs 400 crores, thus making a total issue size of Rs 500 cr. It has a shelf limit of Rs 2000 crore for the ongoing offer. It is issuing Secured Redeemable Non-Convertible Debentures having a face value of Rs 1000 each. The issue opens for subscription on 04.11.19 and will close on or before 22.11.19. 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. EFL is spending around Rs 14.42 crores for mobilizing funds under Tranche-II.
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%).
| Series 1 | Series 2 | Series 3 | Series 4 | Series 5 | Series 6 | Series 7 | Series 8 | Series 9 | |
|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Annually | Cumulative | Annually | Cumulative | Monthly | Annually | Cumulative | Monthly | Annually |
| Face Value/Issue Price of NCDs (Rs./NCD) | Rs 1000 | ||||||||
| Coupon Rate | 9.90% | NA | 10.20% | NA | 9.95% | 10.40% | NA | 9.95% | 10.40% |
| Effective Yield (% per annum)) | 9.89% | 9.90% | 10.22% | 10.20% | 10.41% | 10.39% | 10.40% | 10.41% | 10.39% |
| Amount on Maturity | Rs 1,000 | Rs 1,208 | Rs 1,000 | Rs 1,371 | Rs 1,000 | Rs 1,000 | Rs 1,641 | Rs 1,000 | Rs 1,000 |
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.
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 6.25 will stand enhanced to 6.38.
Issue Ratings:
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.
Financial Performance:
On a consolidated basis, total income/ profit after tax (PAT) of the Company for FY18 were Rs 3294.40 cr. /Rs 476.87 cr. and for FY19 it were Rs 4019.00 cr. / Rs 554.71 cr. respectively. On a total loan book of Rs 24408.54 cr., its Gross and Net NPAs stood at 1.87% and 0.69% as on 31.03.19 as a percentage of the loan book. As on 30.06.2019 its total loan book stood at Rs 24111.38 cr.
Its current paid up equity capital of Rs 213.84 cr. as on 30.06.19 is supported by free reserves of Rs 3699 cr.
Review By Dilip Davda on October 31, 2019
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
