Edelweiss Financial Services Limited NCD: Review and Should you invest?
Edelweiss Financial Services Ltd has launched its public issue of NCDs to mobilise funds from the debt market. Read further to know more about the business of Edelweiss Financial Services Limited.
About the Edelweiss Financial Services Limited:
Previously known as Edelweiss Capital Limited, Edelweiss Financial Services Limited (“EFSL”) was incorporated in 1995 by Mr. Rashesh Shah and Mr. Venkat Ramaswamy. EFSL is registered as a Category I Merchant Banker with SEBI and is the parent company of the Edelweiss Group. The company on a standalone basis is primarily engaged in investment banking services and provides development, managerial and financial support to the businesses of the Edelweiss group entities.
The Edelweiss Group offers a range of products and services, spanning varied asset classes and diversified consumer segments. The businesses of Edelweiss are organized around 8 broad lines –housing finance, NBFC, Wealth Management & Mutual Funds, Alternatives, Life and General Insurance and Asset Reconstruction.
About the Edelweiss Financial Services Limited Group
Over the years, the Edelweiss group has established a presence across major verticals in financial services business like asset management, insurance, asset reconstruction and wealth management. The group is comprised of 28 subsidiaries and 10 associate companies as of September 30, 2022. The total income of the company was ₹ 7,304.6 crs for the year March 31, 2022 and was ₹ 3,393.31 crs for the six months ended September 30, 2022 on a consolidated basis. The company earned profit of ₹ 212.07 crs for the year ended March 31, 2022, and ₹ 111.91 crs for the six months ended September 30, 2022 on a consolidated basis.
EFSL is promoted by Mr. Rashesh Shah and Mr. Venkatchalam Ramaswamy and holds 15.44% and 6.16% of equity respectively. The holding of the Edelweiss group is described in the chart below:
History of Edelweiss Financial Services Ltd:
Edelweiss Financial Services Limited was incorporated on November 21, 1995, under the name Edelweiss Capital Limited and started operations as an investment banking firm after receipt of a Category II license from SEBI. Edelweiss Capital Limited subsequently received a Category I Merchant Banker license from SEBI with effect from October 16, 2000. The name of Edelweiss Capital Limited was changed to ‘Edelweiss Financial Services Limited’ with effect from August 1, 2011.
Edelweiss group operates through various entities offering a bouquet of products including loans, insurance, wealth management, etc. The following table provides a brief understanding of the entities and their businesses:
|ECL Finance||Retail Loans, SME Loans, Corporate Loans||July 2005|
|Edelweiss Retail Finance Ltd||Housing Loans||February 1997|
|Edelweiss Housing Finance Ltd||Housing Loans||May 2008|
|Edelweiss Asset Management Ltd||Mutual Fund||August 2007|
|Edelweiss Alternate Asset Advisors Ltd||Alternative Asset Management||May 2008|
|Edelweiss Asset Reconstruction Company Ltd||Asset Reconstruction||October 2007|
|Edelweiss Tokio Life Insurance Company Ltd||Life Insurance||November 2009|
|Edelweiss General Insurance Company Ltd||General Insurance||March 2016|
|Nuvama Wealth Management Ltd||Wealth Management||August 1993|
EFSL Focus & Strategy
- Asset Management and Insurance will be key growth verticals going forward
- Credit will be retail-focused and scaled in an asset-light model built on partnerships
- New paradigms of focus – processes, institutionalisation, and tech
- Targeting listing of EWM by March 2023
Financial Performance (at consolidated level)
|Debt to Equity||2.60||2.99||3.70||5.09|
*The company has gradually lowered its leverage since FY20 from 5.09x to 2.60x as of September 2022. Post-issue of this offer, the gearing is expected to be 2.65x. The company incurred heavy losses in FY20 and has shown an irregular trend in its profits since then.
CRAR of NBFCs in the group:
Borrowings: Top 10 NCD holders:
Nature of Borrowings:
|Nature of Borrowings||FY22||FY21||FY20|
Type of Borrowings:
|Type of borrowing||FY22||FY21||FY20|
Peer Comparison* (September 2022):
|Particulars||Edelweiss||IIFL Finance||Aditya Birla Capital|
|Loan Book (Rs in crs)||13,163||55,302||64,975|
|Net Worth (Rs in crs)||7,554||9,480||10,557|
|Debt to Equity||2.60||3.44||5.25|
|PAT (Rs in crs)||111.91||726.8||693.00|
|Rating Agency||Edelweiss||IIFL Finance||Aditya Birla Capital|
- Adequate capitalisation with continuous capital raise
- Diversified businesses across various financial services
- Comfortable asset quality with GNPAs at 2.65% and NNPA at 1.93% as of September 2022
- Majority of the portfolio is backed by gold
- Low profitability at the consolidated level
- The inconsistent trend in income at the consolidated level
- Exposure to real estate in the wholesale loan book