10.45% Edelweiss Financial Services NCD April-2023 – Quick Review

Edelweiss Financial Services NCD issue would open for subscription on 6th April, 2023. Edelweiss Financial Services is a leading investment banking company which has diversified businesses across retail, corporate credit, wealth management, etc. NCD interest rates are up to 10.45%. These NCDs are offered for the tenure of 24 months, 36 months, 60 months and 120 months. Interest on these NCDs is paid either monthly, annually or on maturity depending on the option chosen by an investor. Should you invest in Edelweiss Financial Services NCD’s of April, 2023 issue? 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.

Edelweiss Financial Services NCD – Apr-2023 – Issue Details

Here are the NCD issue details.

Opening Date 06-Apr-23
Closure date 21-Apr-23
Security Type Secured, Redeemable and Non-Convertible NCDs
Issue Size (Base) Rs 200 Crores
Issue Size (Oversubscription) Rs 200 Crores
Total Issue Size Rs 400 Crores
Issue price Rs 1,000 per bond
Face value Rs 1,000 per bond
Minimum Lot size 10 bonds and 1 bond there after
Tenure 24 to 120 months
Interest Payment frequency Monthly, yearly or on maturity
Listing on Within 6 working days on BSE/NSE

Interest Rates of Edelweiss Financial Services NCD Apr-2023

Frequency of Interest Payment Annual Cumulative Monthly Annual Cumulative Monthly Annual Cumulative Monthly Annual
Tenor (in months) 24 24 36 36 36 60 60 60 120 120
Coupon (% per Annum) 8.95% NA 9.20% 9.60% NA 9.67% 10.10% NA 10.03% 10.45%
Effective Yield (% per Annum) 8.94% 8.95% 9.59% 9.59% 9.60% 10.10% 10.09% 10.10% 10.46% 10.44%
Amount on Maturity (In Rs.) 1,000 1,000 1,201 1,201 1,201 1,201 1,201 1,201 1,201 1,201

Why to invest in Edelweiss Financial Services 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 10.45% per annum.

2) It issues secured NCDs. Its secured NCDs are safe compared to unsecured NCDs. In case a 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.

3) 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.

Why not to invest in Edelweiss Financial Services NCD?

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

1) Company consolidated revenues are falling and its profits are shrinking in the last 5 years between 2018 to 2022. However, for 9 months ending Dec-22, the company showed some improvement.

2) Company Net NPA has reduced from 5.8% in FY21 to 1.93% as of 30-Sep-2022. However, there is no guarantee that the company can continue to maintain such low NPAs in future.

3) Refer Edelweiss Financial Services Apr-23 NCD prospectus for complete risk factors.

Is Edelweiss Financial Services NCD Safe for investment?

These NCD’s offer high interest rates. Though these days, banks have increased the FD interest rates; however, these are still low compared to the interest rates offered in these NCDs. These NCDs are rated as Acuite AA-/Negative by Acuite Ratings and CRISIL AA-/Negative by CRISIL Ratings. Also secured NCD bonds are relatively safer compared to unsecured bonds while risk is not eliminated.

On the other hand, credit ratings may change in future. In the last 5 years, company revenues have fallen and margins are shrinking. One should not forget about NBFC companies defaulting on NCD investor’s payments in the last few years.

High risk investors who understand all these risk factors can invest in these NCDs. However, investors can avoid long term NCD bonds of 120 months and opt for short to medium tenure bonds as we do not know how such companies would turn in the long term.

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Suresh KP

One comment

  1. Hi Suresh

    Which is best and secure trusted platform to buy digital gold ?
    What are the extra charges during buy sell ?
    Appreciate if you can cover this in your blog as a article

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