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Edelweiss Hsg. Fin. NCD issue review (May apply)

Edelweiss Housing Finance Limited Logo

•    This is the second debt offer from the company since July 2016.
•    EHFL is an Edelweiss group company in the housing finance segment.
•    Company's financial performance is average.
•    AA rating with lucrative coupon rate makes this debt offer investment-worthy.

ABOUT COMPANY:
Edelweiss Housing Finance Ltd. (EHFL) is a non-deposit taking Housing Finance Company focused on offering secured loan products to suit the needs of individuals, including small ticket unsecured loans to its customers mainly in rural areas, and corporates. It is a part of the Edelweiss group which is one leading diversified financial services groups in India. The company offers customers a range of mortgage-related loan products like Home Loans, Non-housing loans including loans against property, construction finance etc. 

As of December 31, 2021, it had 68 offices in 67 cities in India. Over the past several years, EHFL has diversified and expanded its presence into markets that are of greater relevance to the products it offers. Its Branch Operations have significant technology architecture to ensure an industry-leading customer experience. EHFL's operations are supported by 554 employees as of December 31, 2021. As of the same date, Edelweiss Financial Services Ltd., Edelweiss Rural and Corporate Services Ltd. and Edel Finance Co. Ltd. hold 5%, 55.23% and 29.77% paid-up capital of the company.  

ISSUE DETAILS:
EHFL is coming out with its second debt offer of secured non-convertible debentures of Rs. 1000 each worth Rs. 150 cr. with a greenshoe option to retain oversubscription to the tune of Rs. 150 cr. Thus the overall size of the debt offering will be Rs. 300 cr. The issue opens for subscription on April 06, 2022, and will close on or before April 26, 2022. 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. EHFL is spending Rs. 6.72 cr. for this debt offer. The residual portion will be used for the purpose of onward lending, financing and repayment/prepayment of existing borrowings (at least 75%) and general corporate purposes (maximum up to 25%).

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

This issue is rated CRISIL AA - / Negative by CRISIL and Acuite AA/Negative by Acuite Ratings 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.

This debt offer has tenors of 24 months, 36 months, 60 months and 120 months. It is offering coupon rates ranging from 8.50% to 9.70% per annum. The interest payment frequency is monthly, annual and cumulative as per the selection of series. The allocation ratio for this debt offer is the Institutional portion (10%), Non-institutional portion (10%), HNIs (40%) and Retail investors (40%). Allotment will be done on a "First come - First served" basis. 

FINANCIAL PERFORMANCE:
Total income and profit after tax of the Company for the year ending March 31, 2021, stood at Rs. 551.05 cr. and Rs. 3.73 cr. respectively. Total income and profit after tax of the Company for the nine months period ending December 31, 2021, stood at Rs. 392.62 cr. and Rs. 5.42 cr. respectively. The company's Loan Book was Rs. 3645.36 cr. and Rs. 3421.98 cr. as of March 31, 2021, and December 31, 2021, respectively. Its total capital adequacy ratio as of March 31, 2021, and December 31, 2021, computed on the basis of applicable NHB requirements was 26.49% and 26.17%] respectively. EHFL's gross NPAs as a percentage of Loan Book were 3.50% and 3.80% as of March 31, 2021, and December 31, 2021, respectively. Its net NPAs as a percentage of Loan Book were 3.15% and 2.98% as of March 31, 2021, and December 31, 2021, respectively.


Conclusion / Investment Strategy

Though major national savings scheme interest rates have been maintained for the first quarter of FY23, this offer with an AA rating has lucrative coupon rates. Investors looking for a steady medium to long term income may consider investing in this debt offering.

Review By Dilip Davda on Apr 1, 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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).


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.

Email: dilip_davda@rediffmail.com

The Edelweiss Housing Finance NCD Apr 2022 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 Housing Finance NCD Apr 2022 worth investing. The Edelweiss Housing Finance NCD Apr 2022 Note sets the NCD expectations in systematic way which tells you if Edelweiss Housing Finance NCD Apr 2022 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Edelweiss Housing Finance NCD Apr 2022 by providing NCD recommendations i.e. subscribe, avoid and neutral.


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