12.68% Edelweiss ECL Finance Unsecured NCD-Jun-2014

Edelweiss-ECL Finance Unsecured NCD-Jun-2014In Jan-2014, Edelweiss ECL Finance has issued secured NCD’s offering up to 12.52% interest rates. Now ECL Finance Limited is coming up with public issue of Un-Secured NCD to the tune of Rs 200 Crores with an option to retain another Rs 200 Crores. These NCD’s provide attractive interest rates and yield works out to be 12.68% per annum. Can we invest in Edelweiss ECL Finance NCD of Jun-2014? What are its features? What risks are involved if we invest in ECL Finance NCD of Jun-2014.

About Edelweiss ECL Finance Limited

ECL Finance Limited is the Non Banking Finance Company (NBFC) arm of Edelweiss Financial Services which is into lending and investments.

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Features of Edelweiss Finance NCD Jun-2014

  • Issue start date: 17-Jun-2014
  • Issue end date:  2-Jul-2014
  • NCD’s are available in 3 different options.
  • Interest payable monthly, annual or at maturity depending on the option of NCD.
  • Face value of the NCD bond is Rs 1,000.
  • Minimum investment is for 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 and NSE. Hence, these are liquid investments.
  • NRI’s cannot apply to this NCD subscription
  • NCD ratings 'CARE AA' [Double A] by Care and 'BWR AA (Outlook: Stable)' by Brickwork
  • Prospectus: NSE Website about the subscription dates and detailed ECL Finance NCD prospectus from SEBI Website

Below are the Interest rates details.

Interest rates would be 12% per annum for this 70 month NCD issue. It is available in 3 options

  • Interest payable monthly
  • Interest payable per annum
  • Interest payable at maturity

How is company doing in terms of profits?

Its profits are as below:

  • Year ended Mar-2011 – Rs 101.81 Crores
  • Year ended Mar-2012 – Rs 80.95 Crores
  • Year ended Mar-2013 – Rs 121.16 Crores
  • Year ended Mar-2014 – Rs 160.00 Crores

Why to invest?

  • Company is earning good profits in the last few years.
  • Attractive interest rates of 12% per annum. Annualised yield for per month interest payment works out to be 12.68%.

Why not to invest?

  • Unsecured NCD. Means something happens to the company, NCD investors would be given general preference in repayment of capital and interest.
  • Net NPA’s increased from Rs 7.45 Crores (as on Mar-2013) to Rs 20.86 Crores (as on Mar-2014). Increased NPA’s would wipe-off some of the profits of the company.
  • Capital adequacy ratio as per RBI limit should be 15%. It has 18% as on Mar-2013 and actual as on 31-Mar-2014 is 16%. Though it is within RBI limit, decline in capital adequacy ratio restricts future business growth.

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How to apply?

You can apply online with any of the broker where you are maintaining a demat account. You can also directly call Edelweiss ECL Finance company and fill online form or physical forms.

Conclusion: These NCD’s are unsecured in nature. It carries some element of risk. If you are high risk investor, you can consider part of your investment in this ECL Finance NCD. Otherwise, look for safe investment options or invest in Secured NCD’s.

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Edelweiss ECL Finance Unsecured NCD-Jun-2014

Suresh KP


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