Edelweiss Broking NCD July 22 issue review (Apply)

Edelweiss Broking Limited Logo

•    EBL is a broking arm of Edelweiss group.
•    This is the maiden debt offer from this company.
•    It offers lucrative coupon rates with an AA rating.
•    Investors looking for regular long-term income may apply.
Edelweiss Broking Ltd.(EBL) is an Edelweiss group broking arm. EBL is registered as a stockbroker under the SEBI (Stock Brokers) Regulations, 1992. It is registered as a 'Trading Member' with various exchanges including the National Stock Exchange of India (NSE), BSE, MCX, NCDEX, and MSEI to carry out the broking business. EBL is also registered to act as a (i) 'Corporate Agent' with IRDA to solicit Life Insurance, General Insurance and Health Insurance business; (ii) 'Depository Participant with NSDL and CDSL; (iii) 'Research analyst' under SEBI (Research Analyst) Regulations, 2014; (iv) 'Real Estate Agent' under multiple RERA state acts (viz. MAHA RERA/UP RERA/HARYANA RERA), Repository Participant with NERL/CCRL, Mutual Fund Distributor under AMFI registration no. 70892. It also has a Point of Presence registration certificate under Pension Fund Regulatory and Development Authority (PFRDA) for distributing NPS policies.

The company is a technology-driven securities company in India that offers a wide range of financial services including broking services, distribution of financial products, short-term funding for employee stock option schemes and margin trade financing facility.

EBL is one of the leading brokers and distributors in India. It offers broking services through proprietary state-of-the-art Website, Mobile Application, Terminal and API-based trading platforms. It has over 0.3 million active client base and Rs. 1.5 trillion client assets spread across a wide number of active broking accounts as of March 31, 2022.

As of March 31, 2022, it had a network of 71 branches spread across 57 cities. Given the wide network, there are a large number of trading terminals that provide retail stock-broking facilities. Its offices aim at providing a quick and seamless customer experience. EBL's operations are supported by approximately 2,000 employees as of March 31, 2022, including over 950 relationship managers on the payroll.

Edelweiss group has been tapping the debt market for its other group companies regularly for the last few years. Now It is coming out with a maiden debt offer from its broking arm EBL. The company is issuing secured, redeemable, non-convertible debentures having a face value of Rs. 1000 each to raise Rs. 150 cr. with an option to retain over-subscription up to Rs. 150 cr. making an overall issue size of Rs. 300 cr. The issue opens for subscription on July 05, 2022, and will close on or before July 26, 2022. EBL is spending Rs. 6.72 cr. for this NCD issue process. From the residual portion, the company will spend at least 90% on working capital and a maximum of up to 10% for general corporate purposes. Post allotment, NCDs will be listed on BSE. 

The issue is jointly lead and managed by Equirus Capital Pvt. Ltd. and Edelweiss Financial Services Ltd. KFin Technologies Ltd. is the registrar and Beacon Trusteeship Ltd. is the debenture trustee. 

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. This offer has the tenor of 24 months, 36 months, 60 months and 120 months. It offers coupon rates ranging from 8.75% to 9.95%. It has interest payment options as Annually, Monthly or Cumulative as per the choice of series applied for.

EBL is offering an additional incentive of 0.20% p.a. to investors holding NCDs in any of the group companies. For this purpose, on any relevant Record Date, the Registrar and/or the Company shall determine the list of the Primary holder(s) of this Issue and identify such Investor/ NCD Holders, (based on their DP identification and /or PAN and/or entries in the Register of NCD Holders) and make the requisite payment of additional incentive. This additional incentive will not be applicable on NCDs gifted, sold, transferred or bought from the open market, but transfer to joint holder/nominee will be eligible for such incentive. 

This issue is rated CRISIL AA-/Negative by CRISIL Rating Ltd. and ACUITE AA by Acuite Rating and Research Ltd. The rating is not a recommendation to buy, sell or hold securities and investors should take their own decision. The rating may be subject to revision or withdrawal at any time by the assigning rating agency and each rating should be evaluated independently of any other rating. The rating agency has a right to suspend or withdraw the rating at any time on the basis of factors such as new information. 

For the last three fiscals, EBL has reported total income/net profits (losses) of Rs. 431.29 cr. / Rs. - (30.18) cr. (FY20), Rs. 393.69 cr. / Rs. 2.81 cr. (FY21) and Rs. 730.15 cr. / Rs. 94.65 cr. (FY22). As of March 31, 2022, its paid-up equity capital of Rs. 430.45 cr. is supported by free reserves of Rs. 103.43 cr. 

EBL's current debt-equity ratio of 2.10 will stand enhanced to 2.66 post this issue.

Conclusion / Investment Strategy

EBL is offering lucrative coupon rates with AA ratings from CRISIL and ACUITE. It has also posted improvements in its financial performance for FY22. Investors looking for a regular long-term income may consider investing in this debt offering.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Jul 2, 2022

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 before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

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