FREE Account Opening + No Clearing Fees

Edelweiss Fin Tranche II April 23 NCD issue review (May apply)

Edelweiss Financial Services Limited Logo

•    EFSL has become a regular debt market visitor in recent times.
•    This is the 7th debt offer from this company since December 2020. 
•    This offer comes within three months of its last offer of January 2023.
•    Its rating has been maintained at AA- (negative) by Acuite and CRISIL.
•    Investors looking for a steady income may consider parking funds.

Edelweiss Financial Services Ltd. (EFSL) was incorporated on November 21, 1995, under the name Edelweiss Capital Limited and started operations as an investment banking firm after receipt of a Category II license from SEBI. Edelweiss Capital Limited subsequently received a Category I Merchant Banker license from SEBI with effect from October 16, 2000. The name of Edelweiss Capital Limited was changed to 'Edelweiss Financial Services Limited' with effect from August 1, 2011.

After commencing the business as an investment banking firm, the Company, through its subsidiaries has now diversified its businesses to include credit including retail and corporate credit, asset management, asset reconstruction, insurance including life and general insurance business, and wealth management businesses, which are conducted through its subsidiaries. However, the Edelweiss Wealth Management ("EWM") Business and Edelweiss Gallagher Insurance Brokers Limited ("EGIBL") have ceased to be a subsidiary with effect from March 26, 2021, and October 18, 2021, respectively. Its research-driven and client-centric approach and consistent ability to capitalize on emerging market trends have enabled it to foster strong relationships across corporate, institutional (both domestic and international), high-net-worth individuals, and retail clients. EFSL has a Pan-India and international network with approximately 238 domestic offices and three international offices (total of 241 offices), and employed approximately 5969 employees as of December 31, 2022, excluding EWM offices and employees. The group comprises 28 subsidiaries and 11 associate companies as of December 31, 2022.

This is the 7th debt issue from EFSL, the flagship company of the "Edelweiss" group. The last one was in the month of January 2023.

EFSL is coming out with its 7th Secured-Redeemable-Non-Convertible Debenture (NCD) issue worth Rs. 200 crores with a green shoe option of retaining oversubscription to the tune of Rs. 200 crores, thus taking the total issue size to Rs. 400 cr. It has a shelf limit of Rs. 1000 cr. debt issue. The company is offering NCDs having a face value of Rs. 1000 each. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiples of 1 NCD (Rs. 1000) thereon, thereafter. The issue is opening for subscription on April 06, 2023, and will close on or before April 21, 2023. Post allotment, NCDs will be listed only on BSE. 

The company is offering coupon rates ranging from 8.95% to 10.45% and has tenures of 24 months, 36 months, 60 months, and 120 months. The interest will be paid on a monthly, annual, or cumulative basis as per the choice of investors. 

The company is likely to spend around Rs. 9.00 cr. for the entire issue process worth Rs. 400 crores. The company is going to use at least 75% of the net proceeds of this issue for the purpose of repayment/prepayment of interest and principal of existing borrowings and a maximum of up to 25% for general corporate fund needs. Allotment in all these categories will be done on a "First come - First served" basis. EFSL has reserved 10% for QIBs, 10% for Corporate, 40% for HNIs and 40% for retail investors. 

The issue is solely lead managed by Equirus Capital Pvt. Ltd. while KFin Technologies Ltd. is the registrar of the issue. Beacon Trusteeship Ltd. is the debenture trustee. 

This issue is rated "Acuite AA-/Negative" by Acuite Ratings & Research Ltd. and CRISIL AA-/Negative by CRISIL Ltd. Instruments with this rating are considered to have adequate/high degree (respectively) of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. 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.

On the financial performance front, for the last three fiscals, EFSL has (on a consolidated basis) posted a total income / net profit (loss) of Rs. 9602.63 cr. / Rs. - (2043.77) cr. (FY20), Rs. 10837.84 cr. / Rs. 253.92 cr. (FY21), and Rs. 7304.60 cr. / Rs. 212.08 cr. (FY22). Thus it has posted inconsistency in its top and bottom lines. For 3Qs of FY23 ended on December 31, 2022, it earned a net profit of Rs. 233.44 cr. on a total income of Rs. 5534.92 cr. 

Its net NPA stood at 1.93% as of September 30, 2022, against 1.80% as of March 31, 2022. Post this issue its debt-equity ratio will rise from 0.50 to 0.58 and its borrowing stood at 2492.95 cr. (on a standalone basis). 

Conclusion / Investment Strategy

This company has been a frequent debt market visitor in recent times. This is the 7th debt offer from the company since December 2020. With maintained rating and coupon rates, this offer comes within 3 months as the last offer was in January 2023. Investors looking for a steady income may consider parking funds.

Review By Dilip Davda on April 4, 2023

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: ).

The Edelweiss Financial NCD Tranche II April 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Edelweiss Financial NCD Tranche II April 2023 worth investing. The Edelweiss Financial NCD Tranche II April 2023 Note sets the NCD expectations in systematic way which tells you if Edelweiss Financial NCD Tranche II April 2023 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Edelweiss Financial NCD Tranche II April 2023 by providing NCD recommendations i.e. subscribe, avoid and neutral.