Edelweiss Broking Limited NCD IPO – July 2022, Should you invest?

High Yield | AA- Rated | Minimum Investment: 10k Only

Bond overview

Edelweiss Broking Ltd is issuing the Non-Convertable Debentures. These NCDs are AA-/Negative by CRISIL and AA/Negative by ACUITE. The NCDs are being issued in three series: coupon ranges from 8.75% to 9.95% p.a. and different tenures of 2 years, 3 years, 5 years and 10 years. The NCDs are secured and redeemable in nature.

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Coupon rates and effective yield for each of the series

Allocation Ratio

The allocation ratio is prepared based on norms laid down by SEBI. Before announcing the allocation ratio, the same has to be approved by SEBI.  Once the IPO subscription closes, applications will be divided into different categories. The category-wise allocation ratio is always decided and declared during the launch of the particular IPO. Considering the Allocation Ratio, units will be assigned to applicants. Refer to the chart to know the application ratio for Edelweiss Broking Limited NCD-IPO.

Investment Process for EBL NCD IPO

You can invest in IPOs via GoldenPi in 3 easy steps.

If the investment amount is  less than & up to 10 lakhs, retail investors can apply for an IPO online.

If the investment amount is more than 10 Lakhs.

Issue analysis

Pros 

• The coupon rate is between 8.75% to 9.95% which is much higher than FDs.
• EBL is a 100% owned subsidiary of Edelweiss Securities Limited. It will continue to receive support from the Edelweiss group, even after several changes are made in the business segments of the group. 
• The group maintains the liquidity cushion of around 9 to 10% of the balance sheet.

Cons 

• Debt Service Coverage ratio has been decreasing indicating that the company might not be able to service its debt through available profits.
• The Asset quality remains vulnerable as the group declared the stage III assets as its gross NPAs. The ratio was 7.7% on March 31, 2021.

To get better returns than Bank FDs, invest in NCD-IPOs online.

About Edelweiss Broking Limited.

Founded in 2008, Edelweiss Broking Ltd. is a financial services company headquartered in Mumbai, India. The company is a subsidiary of the Edelweiss group which was founded by Rashes Shah. The company is registered with NSE, BSE and MCX Stock Exchange.

1. Mutual funds, 
2. Bonds, 
3. Non Convertible Debentures, 
4. Portfolio Management Service, 
5. Structured products & 
6. Alternative investment fund.

Financial Overview

Cash flow for last 5 years (In crores)

Cash flow refers to the movement of cash in and out of the business at a specific point in time. It represents the net balance of the cash movement.

• • *Cash flow from operating activities reflects the amount a company generates through its product of services.
  • **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchase of assets, sales of securities etc.
  • ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors.https://goldenpi.com/blog/bond-news/5-tax-filing-requirements-for-bond-investors/ It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

Key Highlights

• Active Client base- 3 lacs
• Client assets spread across wide number of active broking accounts- Rs1.5 Lac crores
• Relationship Managers- 950 spread across 57 cities in India.
• Client Acquisition Partners- 23,000
• 71 branches across 57 cities.

Strengths

• Despite the tough macro environment, the group has raised Rs 3700 Cr over the past 24 months across several verticals.
• Adequate liquidity cushion of around Rs. 2625 Cr and un-utilised bank lines of around Rs. 450 Cr as on 31 March, 2021.

Weakness

• Negative Cashflows from operating and Investing activities.

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About GoldenPi Expert

Abhijit Roy | CEO & CO-Founder GoldenPi

With over 15 years of experience across fixed income and debt markets, he brings deep domain expertise along with a strong focus on investor education and transparency. An alumnus of IIT Kharagpur and IIM Calcutta, his views are personal and should not be considered investment advice.

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