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Edelweiss Fin & Inv NCD Jan 2020 offer review (May apply)

Edelweiss Finance & Investments Ltd Logo
  • EFIL is an Edelweiss group arm engaged in financial services.
  • This is the maiden debt offer from this company.
  • Issue rated as CRISIL AA-/Stable and CARE AA-/Stable (Double A minmus/stable).
  • Financial performance shows inconsistent trends for top and bottom lines.

About Company:

Edelweiss Finance & Investments Ltd. (EFIL) is a part of the Edelweiss group, which is one of India's diversified financial service conglomerate offering credit, wealth, asset management, asset reconstruction and capital market advisory services and life and general insurance. The Company is presently engaged in the business of granting loans against securities, margin trade financing and IPO financing. It intends to grow into a leading NBFC of the Edelweiss group's advisory business. The Edelweiss group's advisory business presently includes wealth management, asset management, asset reconstruction and capital markets.

EFIL's product portfolio currently comprises of granting loans against securities, margin trade financing and IPO financing. It provides loans to its customers against the pledge of certain specified securities held by such customers. The product is offered to customers who require liquidity against their investments in certain specific marketable securities including equity shares, units of mutual funds, bonds, debentures and structured products. The tenure of such loans may be up to 30 months. 

Edelweiss group enjoys a large client base of over 1,250,000 clients across its various businesses, as at September 30, 2019. The Edelweiss group had 467 offices being 459 offices across approximately 180 cities in India and eight offices outside India in six cities as at September 30, 2019. These resources are available to EFIL.

EFIL's CRAR computed on the basis of the applicable RBI norms was 377.15%, 31.50%, 20.94% and 47.29%, as at September 30, 2019, March 31, 2019, March 31, 2018 and March 31, 2017, respectively,

Issue Details:

For the purpose of onward lending and for repayment of interest and principal of existing loans(75%) and also for general corporate fund needs (25%), EFIL is coming out with its maiden debt offer of secured, redeemable, non-convertible debentures of face value ofRs 1000 each. The company is issuing NCDs aggregating up to Rs 125 crore with an option to retain oversubscription up to Rs 125 crore thus making overall issue sizes of Rs 250 crore. Issue opens for subscription on 23.01.20 and will close on or before 31.01.20. 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. EFIL is spending Rs 0.77 cr. for mobilizing Rs 250 cr.

This issue has tenure of 18 months, 36 months, 60 months and 120 months. It is offering coupon rates ranging from 9.70% to 10.25%. Interest payments mode is Monthly, Annual or Cumulative as per the choice of investors. Issue is to be applied via ASBA mode only and will be allotted in demat mode only.

Issue is rated CRISIL AA-/Stable and CARE AA-/Stable by CRISIL and CARE respectively. It indicates that instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk. This issue is jointly lead managed by IDBI Capital Markets & Securities Ltd. and Edelweiss Financial Services Ltd. Beacon Trusteeship Ltd. is the debenture trustee while Link Intime India Pvt. Ltd. is the registrar to the issue. Post allotment, NCDs will be listed on BSE.

Specific Terms of the NCDs

Series 1 Series 2 Series 3 Series 4 Series 5 Series 6 Series 7 Series 8 Series 9
Frequency of Interest Payment Annually Cumulative Annually Cumulative Monthly Annually Cumulative Monthly Annually
Minimum Application Rs 10,000 (10 NCDs)
Face Value/Issue Price Rs 1,000
Tenor 18 Months 18 Months 36 Months 36 Months 60 Months 60 Months 60 Months 120 Months 120 Months
Coupon Rate (Retail) 9.70% NA 10.00% NA 9.80% 10.25% NA 9.80% 10.25%
Modes of interest payment Through various mode available
Amount on Maturity Rs 1,000 Rs 1,149.61 Rs 1,000 Rs 1,331.35 Rs 1,000 Rs 1,000 Rs 1,629.77 Rs 1,000 Rs 1,000

All Category of Investors in the proposed Issue who are also holders of NCD(s)/Bond(s) previously issued by the Company, and/or its Promoter, Edelweiss Financial Services Limited ('EFSL') and/ or its group company, ECL Finance Limited as the case may be, and/or are equity shareholder(s) of its Promoter, Edelweiss Financial Services Limited ('EFSL') as the case may be, on the Deemed Date of Allotment and

applying in Series I, Series III, Series V, Series VI, Series VIII and/or Series IX NCDs shall be eligible for additional incentive of 0.20% p.a. provided the NCDs issued under the proposed Issue are held by the investors on the relevant Record Date applicable for payment of respective coupons, in respect of Series I, Series III, Series V, Series VI, Series VIII and/or Series IX NCDs.

Within each Portion, priority in Allotments will be given on a first-come-first-serve basis, based on the date of upload of each Application into the electronic system of the Stock Exchange.

Financial Performance:

For the last three fiscals, EFIL has posted total income/net profit of Rs 159.14 cr. / Rs 12.69 cr. (FY18) and Rs 142.46 cr. / Rs  - (0.36) cr. (FY19). For H1 of FY20 it has posted net profit of Rs 17.09 cr. on total income of Rs. 117.67 cr. Thus there has been inconsistency in its top and bottom lines. According to company, as on 30.09.19 it had no NPAs. As on 30.09.19 it's paid up equity capital of Rs 3.44 is supported by free reserves of Rs 198 cr.

As on September 30, 2019 and March 31, 2019, EFIL's net worth was Rs 198.30 cr. and Rs 177.37 cr. respectively. Its current debt equity ratio of 6.25 will stand enhanced to 7.51 post this issue.

Conclusion / Investment Strategy

Considering average rating, inconsistency in top and bottom lines, cash surplus/risk savvy investors may consider investment in this debt offer. (Other).

Review By Dilip Davda on January 21, 2020

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 prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. 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.


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