Right. Something like the Religare and LVB issue
The Edelweiss stock is already down to 50s from 70s it was some weeks back , this might keep the sentiment negative for the time being but can be a good opportunity to accumulate given the long term prospects of Edelweiss.
I agree with Sumit above, that its a regulatory mis-governance and Edel is unknowingly caught up in this mess .
Disc : Invested.
Very good video by MoneyLife on Edelweiss. It looks like Edelweiss might be facing trouble from multiple fronts not only from Anurag stock sales, but from other brokers as well. As per the article Edelweiss has been asked to buy shares worth 420 cr at the time of sale, which at the current price could be worth or more.
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This video is a must watch for all. It almost indicates that Edelweiss is not a victom but the culprit, and that they have been high and mighty and bullied smal brokers, who are now all fightimg back. Seems like Edelweiss is losing the fight.
I still can’t find a half decent explanation as to why they did not invoke the bank guarantee given by Anugrah instead of selling off shares with no due dillegence. Like Sucheta Dalal says in the end, the fact that this kind of a situation has come up again and again, and that the NCL is holding Edelweiss responsible suggests that this is not an Anugrah problem but an Edelweiss problem.
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In her alternate world everyone including Anugrah are saints or hard working peasants got into the ponzi scheme by some alien who promised the moon. But the one who has the most strong legal basis to act the way it acted is the devil which can only do wrong things to poor folks having small change of 460cr. Sounds familiar? This is called victimhood as an afterthought in plain language after morning hangover.
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Unfortunately for all of us, the courts seem to agree with her alternate world. The sequence of liquidation is first bank guarantee, then pledged shares. Edelweiss flouted it, and so irrespective of whether Anugrah or anyone else is a crook or not, Edelweiss was in the wrong here. So pointing fingers at Anugrah’s crookedness helps no one.
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Like most legal cases in India, let’s postpone our own judgement till a final order is given preferably by HC or SC. My belief in Edel’s biz acumen definitely shaken but as far as I understand their legal acumen is world class. We have not heard Edel’s view in detail and rightly so since they have to fight a case to stem the leakage and not seek publicity like moneylife.
+10 to that it should be a must watch!
The summary for those who may not have the time to watch the video is that Edelweiss Custodial Services Ltd. was alleged to have sold securities of the clients of a bust broker Anugrah Stock and Broking, that were held for custodial purposes. The amount was about Rs 460 crore. This when it had a Bank guarantee from Anugrah that it could have encashed. Instead Anugrah’s clients stocks were sold.
What is a delightful relief is that NSE Clearing Ltd seems to have acted swiftly and issued an order asking Edelweiss to “restitute” the sold shares. In other words, but these exact same shares Edelweiss firm sold and put it in a separate demat account.
Please note that this order was not passed unilaterally. Edelweiss Custodial Services Ltd. (Edelweiss) was issued a showcause notice to present its case. Edelweiss argues instead that NCL’s Member and Courts Settlement Guarantee Fund has no powers to pass the orders. Sucheta Dalal further says that the order was issued after a forensic audit was conducted.
Further the EOW, has put a lien on this amount of Edelweiss at a “City bank”. This should give confidence to Anugrah’s clients. Edelweiss went to the court to get this vacated, but the court said it has to bring some other collateral or a bank guarantee.
The order says,
It also goes ahead and defines “reinstate”
Edelweiss has appealed to SAT - outcome not known, but what’s good news is that NCL has acted fast, with full audit and passed the order quickly. That’s great news for investors
Edelweiss apparently took this Point 26
and argued that
NCL order gives Edelweiss a time period of 15 days from the date of the order.
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First signs of turnaround in the business by Edel and Piramal both. Given that their wholesale loan as a proportion is declining fast, they would be ready for another upcycle whenever it starts with earnest.
Real problem with Edel has been elevated bond yields in the secondary market. They started buying back as per their latest PPT (~500cr) and intent was expressed last quarter.
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Suprised no analyst asked questions regarding Anugrah issue in the concall…we may have to wait longer for answers from the management. Or has the management shared details regarding the same in any exchange filing already ?
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this can be a turn-around from here on. I was just checking this slide of the recent quarterly result and found out that all the seven businesses are well placed and independent.
Post PAG deal, the corporate level debt will reduce, and thus over-all profitability may increase.
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After going through the entire thread of 6 years I understand what Rashesh shah is trying do is to create scale. But a bit baffled that he has not been able to create any shareholder wealth even after 10 long years. For any enterprise to be a great organization it needs to create shareholder wealth consistently. You cant keep on growing your business without creating any shareholder wealth. Would be interesting to see what he does in next couple of years.
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He is just growing different business with different strategies. Neither here nor there kind of stage. Unfortunately i will have to book loss and move on as i don’t see any meaningful price revision. Except of Asset management nothing is working for them.
Pabrai seems on shopping spree. His funds increased stake by another 2% taking over position in EFS a little over 7%. This is interesting considering in one of his recent talk on his YouTube channel, while speaking of investing journey and lessons learned, he briefly mentioned of regretting for investments in levered business and will course correct that going forward.
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May be he is averaging down 
or knows something that we don’t. Edel will be split into 3-5 BUs in the next few years and valued separately going forward. I think final value could be 2-3x from here but won’t be realised in a straight line. Additionally, only reduction in funding cost will increase EBT by 7-800crs as mgmt indicated during the last call. By all practical purposes, the worst is finally behind us unless we get another deep cut in real estate.
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The battle for DHFL is heating up between Piramal Enterprises and Oaktree capital. Does Edelweiss ARC hold assets/stakes in DHFL?
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Another record. Let’s see if this is just a pent up demand or a genuine revival
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In last couple of days DLF management came on ET now and confirmed that there is a record demand for real estate in Delhi. In fact DLF sold super luxury apartment in a day or two(or very short time) and launching another phase in next few months.
There is no stamp duty cut in Delhi, so the sale cannot be attributed fully to stamp duty cut. DLF management has also alluded that the price pressure has eased. I understand DLF(or any builder for that matters) will say that so one has to take the news with pinch of salt. Looks like “Real estate market is climbing a wall of worry”.
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Edelweiss is selling stake and after PAG deal said they need NO capital for next 2 year and now again NCD issued at 9%+ interest and that too in a falling interest rate environment.
perplexed on their need of never ending requirement of funds and at such elevated cost of borrowing.
Any help from fellow members who have insights requested
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They are are raising funds not equity capital. There can be only two reasons for raising it @9.9%. This was to test the market and they found it to be quite easy leading early closure of the issue. This actually puts a cap on the cost of funds they could raise from banks and other institutions. Considering the size of their balance sheet 250cr is a small amount and would definitely get utilised suitably. Also, I don’t think interest rates have further downside from here.
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