Edelweiss Housing Finance NCD July 2016 – Who should invest?
Edelweiss Housing Finance Limited has come up with Secured Redeemable Non Convertible debentures (NCD) which offers 10% annualized yield. Edelweiss Housing Finance NCD would open for subscription on 8 th July, 2016. Edelweiss Housing Finance Limited is a non deposit taking Housing Finance Company focused on majorly offering secured loan products to suit the needs of the individuals and corporate. How good is Edelweiss Housing Finance NCD of July 2016? What are the positive features of Edelweiss Housing Finance Non Convertible Debentures (NCD’s) of 2016? What are the risk factors to be considered if you want to invest in Edelweiss Housing Finance Limited Secured NCD’s?
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About Edelweiss Housing Finance Limited
Edelweiss Housing Finance Limited is a non deposit taking Housing Finance Company focused on majorly offering secured loan products to suit the needs of the individuals and corporate. The Company also offer small ticket unsecured loans to the customers mainly in rural areas. The tenure of these unsecured loans is usually up to two years. Their products include:
- Home Loans, which includes offering secured loans to salaried individuals, self-employed individuals and others for purchase/construction/renovation of residential properties, against mortgage of the same property, comprises 37% of loan book.
- Loan Against property, which includes offering loans for business purposes or for the purchase of commercial property or for investment in asset, against mortgage of the same property, comprises 26% of loan book.
- Construction Finance, which includes offering loans to reputed developers for construction of residential projects, against mortgage of the same property and/or other collateral, comprises 20% of loan book.
- Rural finance, which includes offering unsecured loans to customers (primarily in rural areas) for a tenure of upto 2 years, comprises 16% of loan book.
The Company is part of the Edelweiss Group which is one of India’s prominent financial services organization having businesses organized around three broad lines – Credit including Retail Finance; Non-Credit businesses including Capital Markets, Wealth Management, Asset Management, Balance Sheet Management and others, and Life Insurance business. The product/ services portfolio of the Edelweiss Group caters to the diverse investment and strategic requirements of corporate, institutional, high net worth individuals and retail clients. Edelweiss Group has a pan India presence with a global footprint extending across geographies with offices in New York, Mauritius, Dubai, Singapore, Hong Kong and four other countries. EFSL is listed on BSE and National Stock Exchange of India Limited. EFSL through its subsidiaries, offers to its customers a diversified financial services platform that provides various secured corporate loan products, retail loan products and services, SME financing, equity broking, sourcing and distribution of commodities, wealth advisory services, life insurance, investment banking and institutional broking.
Features of Edelweiss Housing Finance NCD – April 2016
- Issue start date: 8-July-2016
- Issue end date: 27-July-2016
- NCD’s are available in 7 options.
- Interest payable monthly, annual or at maturity depending on the option of NCD.
- Face value of the NCD bond is Rs 1000.
- Minimum investment is for the 10 bonds. Means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
- These NCD bonds would be listed on BSE/NSE. Hence, these are liquid investments.
- NRI’s cannot apply to this NCD subscription.
- These NCD’s are rated as ICRA AA, BWR AA+ and ICRA AA.
- Draft Prospectus can be downloaded this link.
Interest rates of Edelweiss Housing Finance NCD – July 2016
How is the company doing in terms of profits?
Its profits are as below:
- Year ended Mar-2012 – Loss of Rs 4.46 Crores
- Year ended Mar-2013 – Rs 3.79 Crores
- Year ended Mar-2014 – Rs 4.74 Crores
- Year ended Mar-2015 – Rs 21.1 Crores
- Year ended Mar-2016 – Rs 38.21 Crores
Why to invest?
- The company is earning good profits in the last few years. Profits have been increasing year on year, which indicates strong repayment capacity of interest from its profits.
- Good revenue growth story in last 5 years. This indicates company strong capabilities.
- Attractive interest rates of 10% per annum.
- This is secured NCD issue. In case of any non performance of the company and company gets closed for some reason, NCD investors would get preference in repayment of capital along with interest. Hence it is safe to invest in such secured NCD options. However, it is only preference is given to NCD investors and no guarantee that entire amount would be paid-back in such cases.
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Why not to invest?
- They are subject to periodic inspections by the NHB. Non-compliance with the NHB’s observations made during any such inspections could adversely affect our reputation, business, financial condition, results of operations and cash flows.
- Business is vulnerable to interest rate volatility and we will be impacted by any volatility in such interest rates in its operations, which could cause net interest margins to decline and adversely affect its profitability.
- Any increase in the levels of non-performing assets in its loan portfolio, for any reason whatsoever, would adversely affect its business, results of operations and financial condition.
- Other Internal and external factors can be read at page no. 10 of the NCD prospectus.
How to apply these Edelweiss Housing Finance NCD of July 2016?
You can apply online to any of the broker where you are maintaining a demat account. For more information on this you can refer 1 st page of the prospectus.
Conclusion : These Edelweiss Housing Finance Limited NCD’s are secured in nature. Though it carries some element of risk, they are secured. Several times, I advise investors to park money in securing NCD’s as they are safer compared to unsecured NCD’s. Considering high interest rates and secured NCD’s in nature, once can consider investing in these NCD’s after assessing risk factors indicated above.
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Edelweiss Housing Finance NCD July 2016
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I applied today will I get 100% subscription?? thanks
It is on first cum first serve basis. If you have applied before it got oversubscribed, you would get it
Nice work….Self explanatory
if suppose i invest x amt for Tenor of 120months (10yr), but in between i want to withdraw the amt , what can be done for that , is it possible.
Uday, Since these would be listed in stock exchanges, you can sell them if you want to come out before 10 years
Thank.s i am NRI and want to know how to apply thro on line
One can apply through their demat account / Edelweiss broker. You can login to your demat account and go to IPO/NCD section and apply.
good analysis. very useful comments & guideline. Thanks