Edelweiss Financial Services plans to issue NCDs for which subscriptions will open on July 8, 2024. Edelweiss Financial Services is a leading investment bank with diversified businesses including retail, corporate credit and asset management. Interest rates on NCDs can range up to 11%. These NCDs are offered for tenors of 24 months, 36 months, 60 months and 120 months. Interest on these NCDs is payable monthly or annually, depending on the option chosen by the investor. Should you invest in Edelweiss Financial Services NCD July 2024? What are the risk factors to consider before investing in such high-risk NCDs?
About Edelweiss Financial Services Limited
The investment banking firm has diversified its business into credit, including retail and corporate credit, asset management, asset management, asset reconstruction and insurance business, including life and non-life insurance, also through its subsidiaries.
Edelweiss Financial Services NCD – July 2024 – Issue Details
The details of the NCD issue are as follows:
| Application start date | July 8, 2024 |
| Subscription End Date | July 22, 2024 |
| Name of Issuer | Edelweiss Financial Services Limited |
| Security Type | Secured Redeemable Non-Convertible Notes |
| Issue size (base) | 100 crore |
| Issue size (option to hold oversubscribed amounts) | 100 crore |
| Total Issue Amount | 200 crore |
| Issue price | 1,000 per bond. |
| Face value | 1,000 per bond. |
| series | From I to XII |
| Minimum Lot Size | 10 bonds and then 1 bond |
| Tenure | 24, 36, 60, 120 months |
| Interest payment frequency | Monthly and Yearly |
| Listing | Within 6 business days on BSE/NSE |
| Lead Manager | Trust Investment Advisors Private Limited and Nuvama Wealth Management Limited |
| Bond Trustee | Beacon Trusteeship Limited |
Edelweiss Financial Services NCD Interest Rates (July 2024)
| series | I | II | III. | IV | Five | VI | Seven | Eight | Chapter 9 | X | XI | Chapter 12 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Frequency of interest payments | Annual | N/A | Monthly | Annual | N/A | Monthly | Annual | N/A | Annual | Monthly | Annual | Annual |
| Term of employment (months) | twenty four | twenty four | 36 | 36 | 36 | 60 | 60 | 60 | 60 | 120 | 120 | 120 |
| Coupon (annual interest rate) | 9.50% | N/A | 9.57% | 10.00% | N/A | 10.04% | 10.50% | N/A | 10.50% | 10.49% | 11.00% | 11.00% |
| Effective Yield (annual %) | 9.50% | 9.50% | 10.00% | 10.00% | 10.00% | 10.51% | 10.49% | 10.50% | 10.50% | 11.00% | 10.99% | 10.99% |
| Amount at maturity (Rupees) | 1,000 | 1,199 | 1,000 | 1,000 | 1,331 | 1,000 | 1,000 | 1,648 | 1,000 | 1,000 | 1,000 | 1,000 |
Why invest in Edelweiss Financial Services NCD?
Let us review the positive factors in this NCD issue.
1) This NCD offers attractive interest rates and investors can earn up to 11% interest per annum.
2) Issue secured NCDs. Secured NCDs are always safer compared to unsecured NCDs. In case the company gets wound up/closed for any reason, investors in secured NCDs get priority in repayment of capital along with interest backed by the assets of the company.
3) These NCDs have been rated CRISIL A+/Watch Negative. NCD instruments with this rating are considered adequately secure with regard to timely fulfillment of financial obligations. Such instruments have low credit risk.
4) Investors get the opportunity to lock in their investments at higher interest rates.
5) These NCD bonds are listed on the stock exchanges and can be sold as per the availability of buyers.
Want to invest in Edelweiss Financial Services NCDs?
Let us consider some of the negative or risk factors in this NCD issue.
1) The company’s NCD rating is A+/Stable, CRISIL downgraded these ratings to A+ from AA+/Stable. In 2023, it was downgraded to A+/Watch Negative (placed on “rating watch with negative implications”).
2) high customer default rates and the resulting occurrence of non-performing assets could have an adverse effect on our business, financial condition, results of operations and future financial performance;
3) Reference Edelweiss Financial Services July 24 NCD Prospectus For complete risk factors.
Edelweiss Financial Services NCD Bond – July 2024 Issue – Should You Invest?
These NCDs offer high interest rates. Recently, banks have increased the fixed deposit rates but they are still low compared to the interest rates offered on these NCDs. These NCDs are rated CRISIL A+/Watch Negative. Also, secured NCD bonds are relatively safer compared to unsecured bonds, although they are not 100% risk-free.
Meanwhile, last year, these NCD credit ratings were downgraded and are likely to be subject to further rating changes. Over the last five years, the revenues of the companies were falling and margins were shrinking but they started recovering from FY23 onwards. It should not be forgotten that some NBFC companies had defaulted on NCD payments earlier and some NBFCs had delayed repayment of NCDs in the last few years.
High risk investors who understand all these risk factors can invest in these NCDs.
Suresh KP is the Founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and NISM Certified Research Analyst. He has been involved in analyzing financial markets for the last 20 years. He can be reached at suresh@myinvestmentideas.com.
