Edelweiss Financial April 25 NCD issue review - (May apply)

•    This is the 14th debt issue from the company since December 2020.
•    The last debt offer from the company was in the month of January 2025.
•    The rating for this issue is maintained at A+/ Stable by CRISIL.
•    The company has maintained coupon rates at 9.50% to 11.00%.
•    Investors may park moderate funds for the medium term.
 
ABOUT COMPANY:
Edelweiss Financial Services Ltd. (EFSL) – erstwhile known as Edelweiss Capital Ltd. commenced its business as an investment banking firm, it diversified through its subsidiaries to include credit including retail and corporate credit, asset management including mutual fund and alternative asset management business, asset reconstruction, insurance both life and general insurance business, and wealth management business. 

The company has a Pan-India and international network with 250 (two hundred and fifty) domestic offices, and 3 (three) international offices (total 253 offices) and employed 5,826 employees as at September 30, 2024.

Edelweiss group today enjoys a strong brand franchise in the financial services space backed by a reputation for consistent focus on execution and innovation. It has sought to carve a distinct brand identity which, help it to increase awareness and consideration amongst customers.

ISSUE DETAILS:
The company has emerged as the frequent debt market visitor and is now coming out with its 14th NCD issue since December 2020. The company will issue 2000000 Secured Redeemable NCDs having a face value of Rs. 1000 each for an amount of Rs. 100 cr. with a green shoe option of retaining oversubscription up to Rs. 100 cr., thus making an overall issue size of Rs. 200 cr. The issue opens for subscription on April 08, 2025, and will close on or before April 24, 2025.

For this issue, the merchant bankers are Trust Investment Advisors Pvt. Ltd., Nuvama Wealth Management Ltd. (erstwhile known as Edelweiss Securities Ltd.), and Tipsons Consultancy Services Pvt. Ltd., while KFin Technologies Ltd. is the registrar of the issue. Beacon Trusteeship Ltd. is the Debenture Trustee. 

The company is spending Rs. 7.64 cr. for this debt offer and from the net proceeds, it will utilize at least 75% for the purpose of repayment/prepayment of existing borrowings with interest, and a maximum of up to 25% for general corporate purposes. A 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. 

This debt issue carries coupon rates ranging between 9.50% to 11.00% based on the series opted by the investors. It has tenors of 24 months, 36 months, 60 months, and 120 months. Frequency of interest payment will be either Monthly, Annually or Cumulative as per the selection of series by the investors. The company has allocated 10% for Institutional investors, 10% for Non-institutional investors, 40% for HNIs and 40% for Retail investors. 

ISSUE RATINGS:
This issue is rated CRISIL A+/ Stable by CRISIL Ratings Ltd. The ratings given by the Credit Rating Agencies are valid as of the date of this Prospectus and shall remain valid until the ratings are revised or withdrawn. Securities with these ratings are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such securities carry low credit risk.

The rating is not a recommendation to buy, sell, or hold securities and investors should make 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. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, EFSL has posted a total income of Rs. 7212.59 cr. / Rs. 212.07 cr. (FY22), and Rs. 8632.59 cr. / Rs. 405.56 cr. (FY23), and Rs. 9601.58 cr. / Rs. 528.04 cr. (FY24). It suffered a setback for FY22 in line with the general trends following the Pandemic. For 9M of fY25 ended on December 31, 2024, it earned a net profit of Rs. 377.50 cr. on a total income of Rs. 7175.45 cr.

Its Net NPA were at 1.65% as on September 30, 2024. against 1.28% as of March 31, 2024.  Its debt/equity ratio of 2.87 as of December 31, 2024, will increase to 2.91 post this issue. As of December 31, 2024, its paid-up equity capital of Rs. 92.06 cr. was supported by other equity worth Rs. 5025.15 cr.  By the end of 9MFY25, its total AUM had reached Rs. 66.9 lakh crores representing nearly 26% growth over FY24.