True, fully agree. Even I was thinking why they giving dividend
Further consolidation in shareholder of EWM.
PAG has made an investment of ~INR 2,366 crore in EWM, including primary and secondary investment. In addition, PAG is also acquiring the entire ownership of the prior investors in EWM, Kora Management (Kora) and Sanaka Capital (Sanaka), taking its stake to ~61.5%. Edelweiss will continue to hold ~38.5% stake in EWM as earlier envisaged, with the option to increase it further to up to ~44%
I thought Edelweiss will hold 49% in EWM, but looks like it is only 38% as per latest notification.
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I think they have already cleared this in the last conference call maybe the Q2 conference call, so nothing new.
Good portion of the current price can be attributed to the Wealth management business. Edelweiss’s wealth management is the one one of the largest in India, and leader- IIFL Wealth is trading at multibillion (approx $1.5 billion as on today) dollar valuation. So how the company progress going forward will be interesting. Being in the hands of PE player, the growth prospects are likely to improve.
As per CEO (below interview), wealth management has a long runway for growth - 20 CAGE over 10+ years.
https://www.youtube.com/watch?v=Z9Vdu_jpQtA&ab_channel=ETNOW
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Edelweiss has 4 businesses
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NBFC- this business has been a washout… wholesale book is almost closed… retail book is nothing great… it is difficult to see how they will revive this business… going forward…
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Wealth, Broking and Asset Management - Edelweiss shareholder owns about 37% of this business now …and dilution happened at not great value as holding company was in trouble and minority shareholders got nothing from dilution… some skeletons in this business have come out (ARC saga…)
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Insurance business - edelweiss lies at the lower end of long list of insurance companies… while we can debate future value today they are not profitable after 10+ years (in contrast Religare Health a.k.a. CARE has built a descent franchisee in the same time frame)
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treasury - this is very opaque and large… currently loss making…
also remember there is never just one cockroach in the kitchen…
having said that edelweiss has some really smart people and i wouldnt write then off… however i would wait for the clouds to clear and then consider buying when odds seem better…
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they dont need to be great, from now they only need to be okay to give good return. only the WSM business listing will give you the return of now MCAP. it seems to me safe bet.
And all the allegation from whistleblower seems to me mismanagment case, there is no money stolen or fraud from promoter. so i dont think we need to doubt the promoter quality. Hence, i am sticking with it.
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Edelweiss and all NBFCs has had a bad reputation ever since the IL&FS Crises. What people forget it that the their wealth and asset management businesses are amongst the best in the country and the recent drop off has increased the margin of safety even if you completely write-off their credit business.
And like @harshil pointed out above, Rashesh Shah is one of the most brilliant minds in the Indian financial domain, he and his team (great talent acquisition done by co) has weathered it all and has spawned brilliant businesses in a relatively short period. Now that they seem to have the financial backing from top pension and hedge funds coupled with a very low base, each of the 11 business will only see growth from here on.
Discl: Invested (biggest allocation), not an advice.
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Even I am having my biggest bet on Edelweiss. Might add more if it crashed below 5000 mcap.
Management like rashesh give me full confidence on the business.
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Edelweiss is raising 200cr - 400 cr through NCD.
There are 7 Series of NCDs carrying fixed coupon and having tenures ranging from 36 months, 60 months and 120 months with annual, monthly and cumulative interest option. Effective annual yield for NCDs having fixed interest rates ranges from 9.09% to 9.70%.
At least 75% of the funds raised through this Issue will be used for the purpose of repayment /prepayment of interest and principal of existing borrowings of the Company and the balance is proposed to be utilized for general corporate purposes, subject to such utilization not exceeding 25% of the amount raised in the Issue.
Looks like they are repaying some expensive loans with this NCD. But I am equally puzzled why they are paying dividend if cash is so important to them.
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Exactly, why they are paying dividend? even i couldnt able to understand this.
In my opinion, the current price is a decent price. It is trading at 6k crore m.cap, which is comfortable for entry, a good entry. Also, I believe MCAP of 5k crore or the price of below 55 will be full proof of any negative news. My assumption is ,if you have an average of below 55 then there is almost no chance of capital loss.
my investment: My average was 57rs, I was comfortable with it. Then when it came to 84, i realized what worst can happen, and I came to the conclusion it will take 2 years to come to 150rs. So I sold my other share, which I was expecting to give 50% profit in favorable time in a year or in an avg time it will take two years, to make a fresh entry at 84. now my average is 70rs. TBH I am comfortable with my position.
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I cannot recommend any stock and any guestimate of price will also be unfair too. I will be closely monitoring whether Edelweiss can sort out their liability side of the BS/ find a strong partner for their credit business/ hive it off, my assumption is that if they do so, then the co. can concentrate on becoming India’s best investment management platform. And a country which is just beginning to join the formalized economy, gaining maturity in management of finances, where majority of the savings are in wealth destructive FDs and overpriced real-estate, the growth for Edelweiss and allied cos can be exponential.
But there are a lot of ifs in the above hypothesis and majority of them is linked to their credit business which has cost them nearly a decade (also the reason why we were able to get the business so cheap).
Disclosure: Invested, not an advice
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It is not first time Rashesh Shah is in center of corruption
.His name has figured many times, Dubai-Bombay-Delhi-Mumbai.This man and his organization has been founded on dubious dealing.
Disc-was invested,booked huge loss and exited, neverever to deal with them.
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Can you elaborate or provide links please?
I recall, few years back during UPA days, he was involved in scandal related to import of grains/onion and made a big killing through Dubai firms.As usual, got scot free.I think there was series investigation write up on the subject , possibly in Economic Times.I was invested at very high level at the recommendation of Amit Jesmani, stallion Investment -another bloody thieve-exited after long wait of 3 years, booked huge loss.Don,t track now, no interest in such co ,learnt my lesson.Managementis my first filter.Thus I stick to HFDC Gp ,MNC and likes.
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Another myth-“Stay invested for long time…” Simple answer-बोया पेड़ बबूल का तो आम कहाँ से होय। Thus, importance of co and management ,else one can remain invested till his grave ,with no light across tunnel In fact may lead to permanent loss of capital.If one has made a mistake-exit without wait -my mantra.
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That case is still going on.
Still fail to understand why they need to keep raising funds at 9% and there is also the need to pay dividends.
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Adding my view for the reason of dividend: : well, I want to clear myself, that even I think my mind is being full bias because I invested in it, yet I think I have some solid reason to believe that we shouldn’t make dividend payment a big issue.
- Edelweiss employees have lots of share bcz of ESOP, so I believe EFSL looking to treat their employees, and want them to have some reward. So, they can buy more shares in the future, thinking they will be getting consistent dividends no matter what.
- I think as an investor, we shouldn’t worry about every Lil thing. No business can run smooth, so it usual to have some Lil up or down side.
- I have read the last 10 years of AR and watched a ton of Rashesh shah videos to get a grasp of knowing his quality, I found all his answers and vision consistent. Thus, I found no reason to doubt him. Also acknowledging many little allegations, but I think that just a part of a game.
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