Edelweiss Finance & Investments NCD Jan 2020 Review
Edelweiss Finance and Investments is coming up with secured NCDs now in 2020. Edelweiss Finance and Investments Limited (EFIL) NCD Issue would open for subscription on 23rd January, 2020. Edelweiss Finance and Investments NCDs offer up to 10.25% interest rates. These are Secured NCDs. When bank interest rates are low, high interest rate NCDs from EFIL would attract investors for short term to medium term. Should you invest in Edelweiss Finance and Investments NCD Jan 2020? What are the risk factors one should consider before investing in such high risk NCDs?
Also Read: Best Mutual Fund Portfolios to invest in 2020
About Edelweiss Finance and Investments Limited (EFIL)
They are part of the Edelweiss group, which is one of India’s diversified financial service conglomerate offering credit, wealth, asset management, asset reconstruction and capital market advisory services and life and general insurance. Company is presently engaged in the business of granting loans against securities, margin trade financing and IPO financing. Company intends to grow into a leading NBFC of the Edelweiss group’s advisory business. The Edelweiss group’s advisory business presently includes wealth management, asset management, asset reconstruction and capital markets.
Company’s product portfolio currently comprises of granting loans against securities, margin trade financing and IPO financing. They provide loans to customers against the pledge of certain specified securities held by such customers. The product is offered to customers who require liquidity against their investments in certain specific marketable securities including equity shares, units of mutual funds, bonds, debentures and structured products. The tenure of such loans may be up to 30 months.
What are NCD Bonds?
If you want to more about NCD bonds, you can view this video.
Edelweiss Finance and Investments NCD Jan 2020 Issue details
Issue start date: 23-Jan-2020
Issue end date: 31-Jan-2020
NCD’s are available in 9 different series. It offers NCD for 1.5 years, 3 years, 5 years and 10 year tenure.
Interest rates are between 9.7% to 10.25%.
These are secured NCDs.
Interest payable every month, every year and on a cumulative basis depending on the series chosen by the 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. Hence, these are liquid investments.
NRI’s cannot apply to this NCD subscription.
CARE has rated these NCDs as AA-/Stable and CRISIL rated them as AA-/Stable. The ratings of the NCDs by CARE, CRISIL and India Ratings indicate that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.
The base issue size is Rs 125 Crores with an option to retain over-subscription for another Rs 125 Crores totaling to Rs 250 Crores.
IDBI Capital and Edelweiss Financial Services are the Lead managers to the issue.
You can download Edelweiss Finance and Investments NCD Jan 2020 Prospectus here.
What are the interest rates on these NCDs?
Here are the interest rates and coupon rates on these NCDs.
How the NCD issue is allocated to various investors?
1) Retail Portion – 30% of the issue
2) HNI – 30% of the issue
3) Qualified Institutional Portion – 20% of the issue
4) Corporate Portion – 20% of the issue
What are the credit ratings for these NCDs?
Here are the credit ratings of Edelweiss Finance and Investments NCDs.
1) The Secured NCDs have been rated by Crisil as AA-/Stable.
2) The Secured NCDs have been rated by CARE as AA-/Stable.
This indicates that instruments with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.
When these NCDs are proposed to be listed on stock exchanges?
The NCDs are proposed to be listed on BSE. The NCDs shall be listed within 6 working days from the date of the issue cosure.
How is the company doing in terms of Financials?
Here are the financials:
1) Its revenues are reduced from Rs 159 Crores in FY2018 to Rs 142.4 Crores in FY2019.
2) It generated profits of Rs 12.6 Crores in FY2018 and incurred loss of Rs 0.36 Crores in FY2019.
How interest received is taxed in Edelweiss Finance and Investments NCD?
For investors who are applying through demat account, there would not be TDS deduction.
Income tax on interest would be based on individual tax slab. Means, irrespective of whether company deducts TDS or not, you should show the interest income on your income tax return and pay necessary income tax.
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Why to invest?
1) These NCDs offer attractive interest rates where you can get yield up to 10.25% per annum.
3) It offers secured NCD bonds. 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. Hence it is safe to invest in such secured NCD options. However, it is only preference is given to NCD investors and no guarantee that entire amount would be paid-back in such cases.
4) Edelweiss Finance and Investments is part of Edelweiss group that has good brand.
Why not to invest in EFIL NCD Jan 2020?
1) They have a limited product portfolio and its business may be adversely affected if any of its products do not perform as expected or if competing products gain wider market acceptance.
2) Its Company extends loans against securities to its customers and any default by a client coupled with a downturn in the stock markets could result in substantial losses for its company.
3) A failure or inadequacy in its company’s information technology and telecommunication systems or its inability to adapt to rapid technological changes may adversely affect its business, results of operation, financial condition and cash flows.
4) Its company is dependent on the Edelweiss group’s goodwill and brand name. Any change in control of its Company or any other factor affecting the business and reputation of the Edelweiss group may have a concurrent adverse effect on its Company’s reputation, business and results of operations.
5) Limited availability of market information of unlisted companies and AIFs may affect its ability to monitor the maintenance of security.
6) High levels of customer defaults and the resultant non-performing assets could adversely affect its business, financial condition, cash flows, results of operations and future financial performance
7) In the last 1 year, NBFC companies are delaying payment of NCD interest and other commercial papers invested by mutual fund companies.
8) Other Internal and external factors can be read at the risk factors of the NCD prospectus.
How to apply these Edelweiss Finance and Investments NCD Jan 2020?
Edelweiss Finance and Investments NCD Issue of Jan 2020 is available in only in demat form. You can apply online by visiting your demat account login. For more information on this you can refer prospectus.
Should you invest in Edelweiss Finance and Investments NCD Jan 2020?
These NCDs are secured in nature and offer high interest rates. However, company revenues and profits are highly fluctuating. Its profits eroded and incurred losses in the last financial year. Companies that do not make profits can always default in payment of interest or repayment of capital. Also, investing in NCDs in NBFC companies is high risk now. Considering all these negative factors, investors should be cautious and should avoid such NCDs now.
Alternatively, you can invest in large cap mutual funds in 2020 that can provide high returns with similar risk though not guaranteed.
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Edelweiss Finance and Investments NCD Jan 2020 Review
I was just checking the secondary market prices for the recent NCD issues and observed the following:
1. All the recent issues are trading at around 5%-15% less than their issued price
2. These are not actively traded (very less volume)
I would like to know why good secured issues like Shriram Transport Finance, JM Financials, Tata Housing Capital, Edelweiss Finance are
(a) Trading below their issue price when they offer very high interest rates (compared to Bank deposits) inturn increasing their yield
(b) Reason for such low trading volumes
(c) Do NCD payback the full face value (i.e. Rs.1000) on Maturity or cut a particular amount
(d) Is it a better decision to buy these from exchange (i.e. below the issue price) instead of buying directly from company at face value
In the chart tenure should be in months not years
Hello UG, I corrected it now. Pls mail me your postal address to [email protected] so that I can send a small gift for spotting this error.