9.7% Edelweiss Housing Finance NCD – April-2022 Issue – Review

Edelweiss Housing Finance NCD – April-2022 Issue – ReviewEdelweiss Housing Finance April-2022 NCD issue – Features, Interest Rates, Rating and Review

Edelweiss Housing Finance NCD issue would open for subscription on 6th April 2022. Edelweiss Housing Finance is a leading housing finance company in India. NCD interest rates are up to 9.7%. These NCDs are offered for the tenure of 24 months, 36 months, 60 months and 120 months. Interest on these NCD’s are paid either monthly, annually or on maturity depending on the option chosen by an investor. Should you invest in Edelweiss Housing Finance NCD’s? What are the risk factors one should consider before investing in such high risk NCDs? Let me provide Edelweiss Financial NCD review in this article.

Also Read: Best Balanced Funds to invest in 2022

About Edelweiss Housing Finance Limited

Edelweiss Housing Finance Limited is a leading housing finance company in India that offers various loan products like Home Loans (including secured loans for purchase, construction, renovation of residential properties), Non-Housing Loans including loan against property for the purchase of commercial property and business purposes, and Construction Finance to developers for construction of residential projects.

The company also offers small ticket unsecured loans to individuals, mainly in rural areas and corporates. Edelweiss Housing Finance Limited is a part of the Edelweiss Group.

Edelweiss Housing Finance NCD April-2022 – Issue Details

Edelweiss Financial NCD issue opens on Wednesday, 6th April, 2022 and closes on Tuesday 26th April, 2022.

These are secured NCDs.

These secured NCDs are issued in 10 different series. The tenures for these NCDs are for 24 months, 36 months, 60 months and 120 months.

Edelweiss Housing Finance NCD interest rates are up to 9.7% for retail investors.

Edelweiss NCD interest payment is payable monthly, annually or on maturity depending on the series 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 provided the buyer is available.

These are allotted on first come first serve basis. Hence the issue can be closed before this date if it is oversubscribed before the closure date.

NRI’s cannot apply to this NCD subscription.

The base issue size of this issue is Rs 150 Crores with an option to retain over subscription up to Rs 150 Crores totaling to Rs 300 Crores.

Equirus Capital and Edelweiss Financial Services are the lead managers for the issue.

Edelweiss Housing Finance NCD – Apr-22 prospectus

Edelweiss Housing Finance NCD Interest Rates

Edelweiss Housing Finance NCD Interest rates - Apr-2022

Edelweiss Housing Finance NCD Rating

These NCDs are rated as Acuite AA/Negative and CRISIL AA-/Negative. NCD instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

How is the company doing in terms of profits?

Here are the details of standalone profits of the company.

Year ending Mar-2019 – Profit of Rs 62.4 Crores

Year ending Mar-2020 – Profit of Rs 1.5 Crores

Year ending Mar-2021 – Profit of Rs 3.7 Crores

Why to invest in these Edelweiss Housing Finance 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 9.7% per annum.

2) It issues secured NCDs. Its secured NCDs are safe compared to unsecured NCDs. In case 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. Hence it is safe to invest in such secured NCD options.

Why not to invest in Edelweiss Housing Finance NCD?

Let us review some of the negative factors or risk factors in this NCD issue.

1) Company margins are on declining mode. In future, the company might not have honour, interest payments on a timely basis. Repayment of principal amount also might get delayed.

2) Since the company is a housing finance company, it is subject to various regulatory and legal requirements. Also, future regulatory changes may have a material adverse effect on its business, results of operations and financial condition.

3) The COVID-19 pandemic poses unprecedented challenges to the economy and to its business. It has adversely impacted and continues to impact its ability to originate loans, customers’ ability to service its loans, liquidity. Such effects, if they continue for a prolonged period, may have a material adverse effect on its business and results of operations.

4) They require substantial capital for its business and any disruption in sources of capital could have an adverse effect on its business, results of operations and financial condition.

5) Any negative events affecting the Indian real estate sector could adversely affect the value of the collateral for its loans, business and result of operations.

6) Business is vulnerable to interest rate volatility and they will be impacted by any volatility in such interest rates in its operations, which could cause its net interest margins to decline and adversely affect its profitability.

7) Refer prospectus for complete risk factors.

How to apply Edelweiss Housing Finance NCD online?

This issue is available in only in demat form. You can apply online by login to demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.

Also Read: RBI Floating Rate Saving Bonds offer 7.15% – Should you invest?

Edelweiss Housing Finance NCD – Should you invest?

Investors might be thinking whether it is safe to invest in these NCDs?

These NCD’s offers high interest rates. Banks are offering low interest rates, hence investors would get tempted with such NCDs that are offering high interest rates. These NCDs are rated as Acuite AA/Negative by Acuite Ratings and CRISIL AA-/Negative by CRISIL Ratings. However, such credit ratings may change in future without any notice. Company revenue and profits are on declining mode.

Investing in NBFC NCDs are riskier. There could be delays in interest payment and principal amount.

High risk investors who are willing to take these risks can invest in these NCDs.

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4 comments

  • Kamal Garg

    It looks strange that Muthoot Finance’s NCD issue having a credit rating of AA+ by ICRA is offering only 8% for 120 months (yearly interest payment) against Edelweiss’ NCD issue having a credit rating of AA- by CRISIL is offering 9.7% (yearly interest payment).

    A difference of 1.7% for a rating differential of any one notch i.e. AA+ and AA-.

    Isn’t it too much.

    • Hello Kamalji. One is credit rating. Second is check the financials of Edelweiss Housing Finance. Its revenues and margins are dropping. It earns thin margins post covid. On other side Muthoot Finance consistently earns good margins. Consistent margin earning company can always honor repayments to its vendors / NCD investors on timely basis.

      • Kamal Garg

        Sir, agreed. But should the rating agencies not take into account the falling revenue and margins while assigning a rating.
        I think that smells of something potentially wrong, but any how, theek hai, India mein sab kuch chalta hai.

        • Rating agencies rate the company not only by revenue and margins, but several other factors. But I agree that a company with falling revenues + low margins have same rating compared a company that has good margins

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