Edelweiss Housing Finance NCD IPO – April 2022, Should you invest?

Bond overview

Edelweiss Financial Services Limited is issuing the Non-Convertable Debentures. These NCDs are AA-rated by CRISIL and AA by ACUITE. The NCDs are being issued in ten series coupon ranges from 8.50% to 9.70% 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 EHFL NCD-IPO. Refer to the chart to know the application ratio for EHFL NCD-IPO.

Investment Process for EHFL 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..

If the investment amount is more than 10 Lakhs.

Issue analysis

Pro

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

Cons

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

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

About EFSL

Edelweiss Housing Finance Company(EHFL), is a housing finance company registered with National Housing Bank (NHB). Incorporated in 2010, EHFL is one of the leading housing finance company. It provides access to credit to customers for various kinds of loans.

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. It reflects the net flows of cash that are used to fund the company.

Ratio Analysis

 

Key Highlights

Business Verticals:

1. Home Loans
2. Loans against Property (LAP)
3. Home Improvement Loans
4. Plot + Self Construction Loans
5. Balance Transfer of existing loans from other banks/HFCs/NBFCs

Quick walk through on Financials details for 2021

• Net Worth- Rs 7677 Cr
• Current Ratio- 7.36
• Total Assets- Rs 4280.19 Cr
• Liquidity- Rs 2625 Cr

Strengths

• Balanced Capitalisation-Capital raised from global investors, and businesses.
• Improvement in the asset quality.

Weakness

• Low Profitability.
• Negative Cash flow.

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