Edelweiss Financial Services Limited NCD IPO – October 2022, should you invest?

Bond overview 

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

Edelweiss Financial Services Limited is issuing the Non-Convertable Debentures. These NCDs are AA/- rated by CRISIL and AA/- by ACUITE. The NCDs are issued in ten series: coupon ranges from 8.85% to 10.10% 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 EFSL NCD-IPO.

Investment Process for EFSL NCD IPO

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

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Issue analysis

Pros 

• These NCDs are secured by the assets of the company providing an additional layer of protection to your investment. 
• These are secured securities.
• The issuer is offering high coupon rates when compared with FD rates.

Cons

• Macroeconomic conditions such as COVID have negatively impacted the company. However, these conditions are gradually improving. 
• The company is expected to face pressure as asset quality and profitability deteriorate.

About EFSL

First-generation business owners founded Edelweiss Financial Services Limited (EFSL), the parent company of the Edelweiss Group of enterprises, in 1995 to provide investment banking services, especially to technology companies. The business is headquartered in Mumbai, India. Rashesh Shah and Venkat Ramaswamy jointly founded it.

Financial Overview

Revenue, Expenses, EBIT, Net Worth and PAT (In crores)

Cash flow for the 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 or services.
  • **Cash flow from investing activities reflects cash generated and spent relating to investing activities, like purchasing assets, selling securities, etc.
  • ***Cash flow from financing activities gives an insight into the financial stability of a company to its investors. It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

Key Highlights 

Business Verticals: 

1. NBFC
2. Housing Finance
3. Asset Management
4. Asset Reconstruction
5. Insurance
6. Wealth Management

Quick walkthrough on Financials details for 2023

• Net Worth- Rs 8363 Cr
• Current Ratio- 2.87
• Customer Assets- Rs 359300 Cr
• Liquidity- Rs 5250 Cr

Strengths

• Balanced Capitalisation-Capital raised from global investors, and businesses.
• A diversified player with a variety of financial services and a track record of developing strong competitive positions across industries

Weakness

• Low Profitability.
• Negative Cash flow

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