Edelweiss Financial Services NCD – April 2021 – Review
Edelweiss Financial Services is coming up with secured NCD bonds now. These bonds would open for subscription on 1st April, 2021. Edelweiss Financial Services is a leading investment banking company which has diversified businesses across retail, corporate credit, wealth management etc. The NCD interest rates for Edelweiss Financial Services NCD are up to 9.7%. These NCDs are offered for 36 months, 60 months and 120 months tenure. These interests are paid either monthly, annually or on maturity depending on the option chosen by an investor. Should you invest in Edelweiss Financial Services NCD April, 2021? What are the risk factors one should consider before investing in such high risk NCDs?
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 April, 2021 – Issue Details
Subscription opens on 1-April-2021
Subscription closes on 23-April-2021
NCD’s are available in 7 different options. The tenures for these NCDs are for 36 months, 60 months and 120 months tenure.
Coupon interest rates for Category I, II III & IV investors (including Retail investors) are between 9.1% to 9.7%. Yield on these NCD bonds works out up to 9.7% which is highest.
It issues secured NCDs.
Interest is payable monthly, annually or 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 some what liquid investments.
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 for April, 2021 NCD issue is Rs 200 Crores with an option to retain over subscription up to Rs 200 Crores totaling to Rs 400 Crores.
Edelweiss Broking Ltd is the lead manager for the issue.
Download Edelweiss Financial Services April, 2021 NCD Product Note
Interest rates of Edelweiss Financial Services April, 2021 NCD
What are the credit ratings for these NCDs?
These NCDs are rated as Acuite AA – Outlook: Negative and BWR AA-/ Stable. NCD instruments with this rating are considered to have 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 of the company.
Year ending Mar-2019 – Profit of Rs 1,101 Crores
Year ending Mar-2020 – Loss of Rs 1,571 Crores
Why to invest in these NCDs?
1) These Edelweiss Financial Services NCDs offer 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 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) 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.
Should you invest in Edelweiss Financial Services NCD in April, 2021?
Edelweiss Financial Services NCD offer 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 AA- by BWR Ratings and Acute Ratings. However, such credit ratings may change in future without any notice. One should always invest in AAA rated NCDs if they are looking for safe NCD investments. While these are secured NCDs, company has incurred losses in FY2020 which is a concern. Investors should consider these points before investing in such NCDs.
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