9.95% Edelweiss Broking NCD issue – July-2022 – Should you invest?

Edelweiss Broking July-2022 NCD issue – Features, Interest Rates, Rating and Review

Edelweiss Broking limited is a technology driven securities company in India. Edelweiss Broking is coming up with NCD issue which would open for subscription on 5th July 2022. The NCD interest rates are up to 9.95%. 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 Broking NCD’s? What are the risk factors one should consider before investing in such high risk NCDs? Let me provide Edelweiss Broking NCD review in this article.

Also Read: List of Mutual Funds that outperformed every quarter in the last 12 quarters

About Edelweiss Broking Limited

Edelweiss Broking limited is a technology driven securities company in India that offers a wide range of financial services including broking services, distribution of financial products, short term funding for employee stock option schemes and margin trade financing facility.

It is one of the leading broker and distributor in India. It offers broking services through its proprietary state of the art Website, Mobile Application, Terminal and API based trading platforms.

The Company has over 0.3 million of active client base and ₹ 1.5 trillion of client assets spread across a wide number of active broking accounts as of March 31, 2022.

Edelweiss Broking NCD July-2022 – Issue Details

Edelweiss Broking NCD issue opens on Tuesday, 5th July, 2022 and closes on Tuesday 26th July, 2022. 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.

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 Broking NCD interest rates are up to 9.95% 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.

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 Broking NCD – Jul-22 prospectus

Edelweiss Broking NCD Interest Rates

Edelweiss Broking NCD Interest Rates - July-2022 NCD issue

Edelweiss Broking NCD Rating

These NCDs are rated as Acuite AA 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 profits/losses of the company.

Year ending Mar-2020 – Loss of Rs 30.1 Crores

Year ending Mar-2021 – Profit of Rs 2.8 Crores

Year ending Mar-2022 – Profit of Rs 94.6 Crores

Why to invest in these Edelweiss Broking NCD’s?

Let us review the positive factors in this NCD issue.

1) This NCD offers attractive interest rates where investors can get interest up to 9.95% 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 Broking NCDs?

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

1) Company has incurred loss for FY20. Investing in loss making company is high risk.

2) Company works as mutual fund distributor and earns commissions from regular mutual funds. Investors are moving towards direct mutual funds now and this can impact company commissions in the future which they get from AMCs.

3) Refer prospectus for complete risk factors.

How to apply Edelweiss Broking 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: This Hybrid Mutual Fund generated over 8.6% returns every year in last 5 years

Edelweiss Broking NCD – Should you invest?

Investors might be thinking whether it is safe to invest in these NCDs or not?

These NCD’s offers high interest rates. Currently 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.

Investing in company NCDs are riskier. There could be delays in interest payment and repayment of capital. Since these are secured NCDs, the risk is on the lower side, however its not zero.

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

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Suresh KP

7 comments

  • Suresh

    Sir how can you call this loss making..it’s in profit for last 2 years!!

  • Kamal Garg

    Fail to understand why a broking house/company should require funds through NCD from the open market. Does it mean that the Company’s operations do not sustain regular investment in technology upgradation (which is very bad) or that the Company requires money to either play in the market/leveraged operations or to give fund based credit to its clients/investors, again for leveraged operations (which is even more worse).

  • sameer

    sir,

    previous ncds of edelweiss are giving yield of 11-12 % .my query is edelweiss retail finance ncd is giving more than 12% yield if purchase from secondary market .what is your view on same .

    • Check NCD ratings + financial performance before investing in any NCDs. While ratings can change, atleast it would give comfort you are not investing in low rated NCDs

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