Edelweiss Financial NCD October 2024 issue review - (May apply)

•    This is the 12th debt issue from the company since December 2020.
•    The last debt offer from the company was in the month of April 2024.
•    The rating for this issue is A+/Watch Negative by CRISIL.
•    The company offers coupon rates ranging from 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. 

It has a Pan-India and international network with 251 (two hundred and fifty-one) domestic offices, and 3 (three) international offices (total 254 offices) and employed 5,889 employees as at June 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 12th 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 October 07, 2024, and will close on or before October 18, 2024.

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. 7.59 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 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+/Watch Negative 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 four fiscals, EFSL has posted a total income of Rs. 10954.94 cr. / Rs. 253.92 cr. (FY21), 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. 528.05 cr. (FY24). It suffered a setback for FY22 in line with the general trends following the Pandemic. For Q1 of fY25 ended on June 30, 2024, it earned a net profit of Rs. 85.30 cr. on a total income of Rs. 2336.57 cr.

Its Net NPA were at 1.27% as on June 30, 2024. against 1.28% as of March 31, 2024.  Its debt/equity ratio of 3.35 as of March 31, 2024, will increase to 3.38 post this issue. As of June 30, 2024, its AUMs stood at Rs. 54700.28 cr., and the customer base reached 8.2+ million.