Edelweiss Retail Finance NCD Review

Edelweiss Retail Finance NCD
Edelweiss Retail Finance NCD issue plans to raise Rs. 500 crore from Public issue of secured NCDs (includes the green shoe option of Rs. 250 crore). The issue opens on March 7 and closes on March 22, 2018.The Non convertible debentures(NCD) are offering up to 9.25% interest rate for a 10 year period as per option indicated below:

  3 years 5 Years 10 Years
Frequency Monthly Annual Monthly Annual Monthly Annual
Interest  Rate 8.42% 8.75% 8.65% 9% 8.88% 9.25%
Salient Points & Assessment
  • Edelweiss is a very savvy group and timing of public issue could indicate that the Group is seeing the possibility of a increase in interest rates in future.
    Edelweiss Retail Finance Ltd. (ERFL) is retail finance segment arm of Edelweiss group  and does SME Finance, Loan against Property, Construction finance and Rural finance.
  • The issue opens on March 7 and closes on March 22, 2018, but is likely to close early due to over subscription.
  • Unlike SREI finance NCD which has been open now for many days , Edelweiss Retail Finance NCD is likely to close in few days time.
  • Edelweiss group enjoys good reputation and NCDs of ECL Finance and EHFL (Edelweiss Housing Finance Ltd.) are already listed and are regularly traded.  
  • Credit rating :  CRISIL AA/Stable and ICRA  Aa/Stable
  • Edelweiss Retail Finance NCD is a profitable company with loan book of 283.30 crore , Capital adequacy ratio of 16.19%  against minimum stipulation of of 15% by RBI, Gross NPAs 1.01%.
  • NCDs will be listed on BSE and NSE
  • Allotments are first come,first serve basis and retail quota may be over in 2-3 days time
  • In present scenario where many expect interest rates to go up or stand out, 3 / 5 year options are OK and 10 year is not a good option.  Similar yield NCDS are available in secondary market but trading is not regular and jobbing differences are many times high.
  • I do not intend to subscribe to this NCD as I already hold reasonable holding in ECL Finance & EHFL Finance NCD and present offer is just OK and not attractive. Further NCDSs like DHFL NC, DHFL NP, EHFL N6 are available in secondary market at yields of 9% plus.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

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