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

Edelweiss Financial Services NCD issue would open for subscription on 3rd January, 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 January, 2023 issue? What are the risk factors one should consider before investing in such high risk NCDs? Let me provide Edelweiss Financial NCD review in this article.

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 226 offices, including 7 international offices, in approximately 145 cities in India and six international locations and employed over 5,600 employees excluding EWM and EGBIL offices and employees.

Edelweiss NCD details of Jan-2023 issue - Interest rates, Risk Factors and Review

Edelweiss Financial Services NCD – Jan-23 – Issue Details

Edelweiss Financial NCD issue opens on Tuesday, 3rd January, 2023 and closes on Monday 23rd January, 2023. Here are the issue details.

Opening Date 03-Jan-23
Closure date 23-Jan-23
Security Type Secured, Redeemable and Converted NCDs
Issue Size (Base) Rs 200 Crores
Issue Size (Shelf) Rs 200 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, 36, 60 and 120 months
Series Series I to X
Interest Payment frequency Monthly, Yearly and Cumulative
Listing on Within 6 working days on BSE

NRI’s cannot apply to this NCD subscription.

Equirus Capital Pvt Ltd is the lead manager for the issue.

Interest Rates of Edelweiss Financial Services NCD Jan-23

Series Months Interest payment Coupon Interest Rate Effective Yield Maturity Value
I 24 Annual 9.00% 8.99% 1,000
II 24 Cumulative NA 9.00% 1,188
III 36 Monthly 9.20% 9.59% 1,000
IV 36 Annual 9.60% 9.59% 1,000
V 36 Cumulative NA 9.60% 1,317
VI 60 Monthly 9.67% 10.10% 1,000
VII 60 Annual 10.10% 10.09% 1,000
VIII 60 Cumulative NA 10.10% 1,618
IX 120 Monthly 10.00% 10.46% 1,000
X 120 Annual 10.45% 10.44% 1,000

Edelweiss Financial Services NCD Rating

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.

How is the company doing in terms of profits?

Here are the details of standalone profits of the company.

Year ending Mar-2019 – Profit of Rs 102.8 Crores

Year ending Mar-2020 – Profit of Rs 82.5 Crores

Year ending Mar-2021 – Profit of Rs 716.2 Crores

Year ending Mar-2022 – Profit of Rs 933 Crores

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 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.

3) It generates consistent profits in the last 4 years (standalone). However, one should note that its consolidated nos show they incurred losses in FY20. Investing in consistent profit making companies would help NCD interest to get seamless interest payments and repayment of their capital.

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) 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.

2) 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 apply Edelweiss Financial Services NCD online?

This issue is available in only in demat form. You can apply online or through any of the broker website where you are having a demat account. Application forms can be downloaded on the lead manager web site. For more information on this you can refer prospectus.

Is Edelweiss NCD Safe for investment?

Investors might be thinking whether it is safe to invest in these NCDs?

These NCD’s offer high interest rates. These days banks have increased the FD interest rates; however, these are still low compared to these NCD interest rates. These NCDs are rated as Acuite AA-/Negative by Acuite Ratings and CRISIL AA-/Negative by CRISIL Ratings.

On the other hand, such credit ratings may change in future without any notice. One should not forget about NBFC companies defaulting on NCD investor’s payments in the last few years.

Like I indicated earlier, investors should always invest in AAA / AA / A rated NCDs if they are looking for safe NCD investments.  Since it meets this criteria, high risk investors can invest in these secured NCDs and get high returns.

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Suresh KP

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