Edelweiss Financial Services is launching NCD issue that would open for subscription on 8th April, 2024. Edelweiss Financial Services is a leading investment banking company which has diversified businesses across retail, corporate credit, wealth management, etc. NCD interest rates are up to 10.45%. These NCDs are offered for the tenure of 24 months, 36 months, 60 months and 120 months. Interest on these NCDs is paid either monthly, annually or on maturity depending on the option chosen by an investor. Should you invest in Edelweiss Financial Services NCD’s of April, 2024 issue? What are the risk factors one should consider before investing in such high risk NCDs?
About Edelweiss Financial Services Limited
This investment banking company, through its subsidiaries has diversified its businesses to include credit, including retail and corporate credit, wealth management, asset management, asset reconstruction and insurance including life and general insurance businesses, which are conducted through its subsidiaries.
Edelweiss Financial Services NCD – April-2024 – Issue Details
Here are the NCD issue details.
| Subscription opening Date | 08-Apr-24 |
| Subscription closure Date | 23-Apr-24 |
| Issuing Security Name | Edelweiss Financial Services Limited |
| Security Type | Secured, Redeemable, Non-Convertible Debentures |
| Issue Size (Base) | Rs 100 Crores |
| Issue Size (Option to retain over subscription) | Rs 100 Crores |
| Total issue size | Rs 200 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | I to XII |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 24, 36, 60 and 120 months |
| Interest Payment frequency | Monthly and Annuallly |
| Listing on | Within 6 working days on BSE/NSE |
| Lead Manager | Trust Investment Advisors Private Limited and Nuvama Wealth Management Limited |
| Debenture Trustee/s | Beacon Trusteeship Limited |
Interest Rates of Edelweiss Financial Services NCD April-2024
| Series | I | II | III | IV | V | VI | VII | VIII | IX | X | XI | XII |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Annual | NA | Monthly | Annual | NA | Monthly | Annual | NA | Annual | Monthly | Annual | Annual |
| Tenure (months) | 24 | 24 | 36 | 36 | 36 | 60 | 60 | 60 | 60 | 120 | 120 | 120 |
| Coupon (% per Annum) | 9.00% | NA | 9.20% | 9.60% | NA | 9.67% | 10.10% | NA | 10.10% | 10.00% | 10.45% | 10.45% |
| Effective Yield (% per Annum) | 9.00% | 9.00% | 9.60% | 9.60% | 9.60% | 10.10% | 10.09% | 10.10% | 10.10% | 10.46% | 10.44% | 10.44% |
| Amount on Maturity (In Rs.) | 1,000.00 | 1,188.20 | 1,000.00 | 1,000.00 | 1,316.71 | 1,000.00 | 1,000.00 | 1,618.60 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 |
Why to invest in Edelweiss Financial Services NCD?
Let us review the positive factors in this NCD issue.
1) This NCD offers attractive interest rates where investors can get interest up to 10.45% per annum.
2) It issues secured NCDs. Secured NCDs are always safe compared to unsecured NCDs. In case a company gets wind-up/shut down for some reason, secured NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company.
3) These NCDs are rated as CRISIL A+/Stable. NCD instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
Why not to invest in Edelweiss Financial Services NCD?
Let us review some of the negative factors or risk factors in this NCD issue.
1) Company consolidated revenues have fallen in FY2022 compared to previous years. However, for FY23 we could see a good improvement.
2) While Company NCD ratings are A+/Stable, CRISIL has downgraded these ratings from AA+/Stable to A+ in 2023.
3) High levels of customer defaults and the resultant non-performing assets could adversely affect its business, financial condition, results of operations and future financial performance.
4) Refer Edelweiss Financial Services April-24 NCD prospectus for complete risk factors.
Edelweiss Financial Services NCD Bonds – April-2024 Issue – Should you invest?
These NCD’s offer high interest rates. Though banks have increased the FD interest rates these days, they are still low compared to the interest rates offered in these NCDs. These NCDs are rated as CRISIL A+/Stable by CRISIL Ratings. Also, secured NCD bonds are relatively safer compared to unsecured bonds while risk is not 100% eliminated.
On the other hand, recently these NCD credit ratings were downgraded and these can change in future too. In the last 5 years, company revenues have fallen and margins are shrinking, however, started regaining now from FY23. One should not forget about some of the NBFC companies defaulted NCD payments earlier and some NBFCs delaying NCD re-payments in the last few years.
High risk investors who understand all these risk factors can invest in these NCDs.
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Dear Sir,
Thank you for your analysis.One question : In case of a Secured NCD, I can understand risk of delayed payments ( interest payouts and principal). However, is the risk of default real? I presume, it is not.
Would appreciate your clarification, please.
Just check details about DHFL Secured NCDs. These were several secured NCDs issued before the scam broke-out, however thousands of investors has not received the money. Recently many readers on this blog commented that SREI had many NCD issues earlier and there is delay in payment of interest and many were enquiring whether their capital is at risk or not. These are the risks one should consider before purchasing these bonds.