Edelweiss Financial Services plans to issue an NCD with subscriptions starting October 7, 2024. Edelweiss Financial Services is a leading investment banking firm with diversified businesses including retail, corporate credit, and asset management. Interest rates on NCDs are the best. 11%. These NCDs are offered in terms of 24 months, 36 months, 60 months, and 120 months. The interest on these NCDs is paid either monthly, annually or on maturity, depending on the option selected by the investor. Should you invest in Edelweiss Financial Services NCD October 2024 issue? 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 businesses to include credit, including personal and corporate credit, asset management, asset management, asset restructuring, and insurance, including life insurance and non-life insurance operations conducted through its subsidiaries, through its subsidiaries.
Edelweiss Financial Services NCD October 2024 – Issue Details
Details of the NCD issue are as follows:
| Subscription start date | October 7, 24 |
| Subscription end date | October 18, 24 |
| Issued securities name | Edelweiss Financial Services Limited |
| Type of security | Secured, redeemable, non-convertible debt |
| Publication size (base) | 100 million rupees |
| Publish size (option to keep beyond subscription) | 100 million rupees |
| Total publication size | 200 million rupees |
| Issue price | 1,000 rupees per security deposit |
| face value | 1,000 rupees per security deposit |
| series | I-XII |
| minimum lot size | 10 bonds and then 1 bond |
| tenure | 24, 36, 60, 120 months |
| Interest payment frequency | monthly and yearly |
| Listed | Within 6 business days for BSE |
| lead manager | Trust Investment Advisors Private Limited Nuvama Wealth Management Limited TIPSONS CONSULTING SERVICES PRIVATE LIMITED. |
| bond trustee | BEACON TRUSTEESHIP LIMITED. |
Edelweiss Financial Services NCD Interest Rate
| series | I | II | Ⅲ | Ⅳ | V | VI | VII | Ⅷ | IX | × | XI | XII |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest payment frequency | yearly | N.A. | monthly | yearly | N.A. | monthly | yearly | N.A. | yearly | monthly | yearly | yearly |
| Period of employment (months) | twenty four | twenty four | 36 | 36 | 36 | 60 | 60 | 60 | 60 | 120 | 120 | 120 |
| Coupon (% per year) | 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 (%/year) | 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 (Rs.) | 1,000 | 1,199 | 1,000 | 1,000 | 1,331 | 1,000 | 1,000 | 1,647.90 | 1000* | 1,000 | 1,000 | 1000* |
Why invest in Edelweiss Financial Services NCD Oct-2024?
Let’s take a look at the positive factors in this NCD issue.
1) This NCD offers attractive interest rates where investors can earn up to 11% interest per annum.
2) Issue a secure NCD. A secured NCD is always safer compared to an unsecured NCD. If a company liquidates/goes out of business for any reason, secure NCD investors have priority repayment of their capital along with interest as it is backed by the company’s assets.
3) These NCDs are rated as CRISIL A+/Surveillance Negative (placed in “Evaluation Surveillance with Negative Impact”). NCD products with this rating are considered to have sufficient security with respect to timely repayment of financial obligations. The credit risk of such products is low.
4) Investors have the opportunity to lock in their investments at higher interest rates.
5) These NCD bonds are listed on stock exchanges and can be sold subject to availability of buyers.
Interested in investing in Edelweiss Financial Services NCD?
Let us review some of the negative or risk factors in this NCD issue.
1) The company’s NCD rating is A+/Watch negative; CRISIL has downgraded these ratings to A+ from AA+/Stable. Moved to A+/Watch Negative in 2023.
2) Series IX and XII NCDs will redeem the capital amount in stages. This means that investors receive their principal amount in installments.
3) high customer defaults and resulting non-performing assets could adversely affect its business, financial condition, results of operations and future financial performance;
4) Reference Edelweiss Financial Services October 24th NCD Prospectus Addresses complete risk factors.
Edelweiss Financial Services NCD – Should I invest?
These NCDs offer high interest rates. Although banks have increased FD interest rates in the past few quarters, they are still low compared to the interest rates offered on these NCDs. These NCDs are rated CRISIL A+/Watch Negative. Also, although secured NCD bonds are relatively safer than unsecured bonds, they are not 100% risk-free.
However, these NCD credit ratings were downgraded last year and may change in the future. Over the past five years, corporate revenues were declining and profit margins were shrinking, but they started to recover from FY23 onwards. It must be remembered that some NBFC companies have defaulted on NCD payments earlier and some NBFC companies have delayed NCD repayments in the past 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 a NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years. Contact him at suresh@myinvestmentideas.com.
