9.95% Edelweiss Financial Services NCD – December 2020 – Review

Edelweiss Financial Services NCD – December 2020 - ReviewEdelweiss Financial Services NCD – December 2020 – Review


Edelweiss Financial Services are coming up with redeemable secured NCD bonds Issue that would open for subscription on 23rd December, 2020. Edelweiss Financial Services Limited is leading NBFC company in India. Edelweiss Financial Services NCD interest rates are up to 9.95%. Edelweiss Financial Services offers these bonds for the tenure of 36 months, 60 months and 120 months. One can get fixed income, either monthly, yearly or on maturity. Should you invest in Edelweiss Financial Services NCD December, 2020? What are the risk factors one should consider before investing in such high risk NCDs?

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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. They believe that its research driven and client-centric approach and consistent ability to capitalize on emerging market trends has enabled them to foster strong relationships across corporate, institutional (both domestic and international), high net worth individuals and retail clients. They have a pan-India and international network with approximately 339 offices, including two corporate offices in Mumbai and 10 international offices, in approximately 145 cities in India and six international locations and employed approximately 9,197 employees as of September 30, 2020. Its group comprises 47 subsidiaries (including NBFCs and an HFC) as at September 30, 2020.

Edelweiss Financial Services NCD December, 2020 – Issue Details

Subscription opens on 23rd December, 2020

Subscription closes on 15th January, 2021

NCD’s are available in 7 options. It offers NCD bonds for 36 months, 60 months and 120 months tenure.

Coupon interest rates are between 9.35% to 9.95%.  Yield on these bonds are up to 9.95%.

These are secured redeemable NCDs.

Interest payable monthly, yearly and on maturity depending on the option chosen by the NCD investor.

The face value of the NCD bond is Rs 1000.

Minimum investment is for the 10 bonds. Means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.

These NCD bonds would be listed on BSE within 6 working days from the issue closure date. Hence, these are liquid investments.

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NRI’s cannot apply to this NCD subscription.

The base issue size is Rs 100 Crores with an option to retain over subscription up to Rs 100 Crores totaling to Rs 200 Crores.

Equirus Capital is the lead manager for the issue.

Download Edelweiss Financial Services Dec 2020 NCD Prospectus

Edelweiss Financial Services Dec 2020 NCD – Interest Rates

Interest Rates, Coupon Rates and Yield of Edelweiss Financial Services NCD – December 2020

What are the credit ratings for these NCDs?

The Secured NCDs have been rated as CARE as A+ (Outlook: Stable) and BWR AA-/Stable by Brickwork Ratings which indicates a high degree of safety regarding timely servicing of financial obligations. Such ratings indicate Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

How is the company doing in terms of profits?

Here are the details of profits / Losses of the company.

Year ending Mar-2019 – Profit – Rs 995.1 Crores

Year ending Mar-2020 – Loss – Rs 20,245 Crores

Half year ending Sep-2020 – Loss – Rs 2,975 Crores

Why to invest in these NCDs of Edelweiss Financial Services?

1) These NCDs offer attractive interest rates where investors can get interest up to 9.95% per annum.

2) It issues secured NCDs. In case of any non performance of the company and the company gets closed for some reason, NCD investors would get preference in repayment of capital along with interest as those backed up by assets of the company. Hence it is safe to invest in such secured NCD options.

Why not to invest in these NCDs?

1) The company has incurred losses in the last 1.5 years. This indicates that company might struggle to pay interest to the NCD holders in future.

2) The financial industry is becoming increasingly competitive. This creates significant pricing pressures for such companies to retain existing customers and get new business. Its growth will depend on its ability to compete effectively in this environment.

3) Current difficult conditions in financial markets can adversely affect its business, which could materially reduce its revenue and income.

4) Its revenues are dependent on its sustained ability to successfully manage transactions and advisory assignments and on managing client concentrations.

5) They derive a portion of its revenue from its investment banking and securities business and are subject to various risks associated with investment banking and securities business.

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6) Refer prospectus for complete risk factors.

How to subscribe to these NCDs?

This issue is available in only in demat form. You can apply online or through any of the broker website where you are maintaining a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.

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Should you invest in Edelweiss Financial Services NCD in Dec-2020?

Here are a few thoughts about such NCDs:

1) Currently banks are providing reduced interest rates which are between 4% to 5.5% per annum. Edelweiss Financial Services is offering secured NCDs that offers high interest rates up to 9.95%. This would attract investors who are looking to earn higher fixed income.

2) These NCDs are rated as A+ / AA- by CARE and CARE and BWR Ratings which are considered as low. One should always invest in AAA rated NCDs or fixed deposits which can provide some security to their investments.

3) One of the major concern is that company has incurred losses in the last 1.5 years. Investors should always invest in profit making companies so that the interest is paid on time for them.

4) One should not forget about NBFC crisis (e.g. DHFL crisis) that started a few years back. Your investment as well as interest could be at risk and there could be delays in repayment of your matured NCDs.

5) For me, this NCD issue is a VERY HIGH RISK. I would advise investors to stay away from such NCDs as of now.

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Suresh KP

6 comments

  • A. Goyal

    Are GOI 7.75 (taxable ) bonds open for investment as of date.

  • Kamal Garg

    It is strange that an NBFC (the sector in itself is going through huge and substantial pain due to various reasons in the economy) which is incurring losses for the last 1.5 years has come out with a very long tenure of 10 years NCD. As is widely believed, the actual NPAs in most of the cases would be higher than what is acknowledged and classified by any Company, for that matter. It is much better to stay away from such companies and offerings.

  • Dr B N Panda

    I agree. Why should any body invest in a loss making company where the company has negative cash flow?
    The third quarter results perhaps will bring more pain due to classification of NPAs.

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