Edelweiss' Q4 net dips 3% to Rs 232 cr, company to float $1-bn debt fund

Existing equity enough to support growth for 3-4 years, says company

Edelweiss Financial Services on Tuesday said its current net worth of Rs 8,715 crore and retained earnings will support growth for the next 3-4 years, while its balance sheet remained flat during financial year (FY19).

It plans to raise a $1-billion structured debt fund for corporates that could be closed in FY20, depending on the market environment. The first closure of the proposed fund could be at $400-500 million.

The non-banking finance company (NBFC) reported a 3.4 per cent drop in consolidated net profit at Rs 232 crore for the fourth quarter of FY19, compared to the year-ago period. Its net profit for same quarter in FY18 stood at Rs 240 crore. Its total revenues rose to Rs 2,942 crore in Q4 from Rs 2,586 crore in the year-ago period.

Consolidated net profit for the full financial year rose from Rs 863 crore in 2017-18 to Rs 995 crore in 2018-19, while total revenues rose from Rs 8,920 crore to 10,886 crore, respectively. The company's stock shed 4.64 per cent to close at Rs 156 on Tuesday.

Rashesh Shah, Chairman and CEO, Edelweiss Financial Services said, "A diversified business model helped us post steady profits in FY19 despite a flat balance sheet. This focus has been protecting asset quality, ensure avalibility of resources (liquidity)."

The company's gearing ratio has dipped from five to near four, creating more room for rasing funds on the existing capital base, Shah said.    

The pace of loan book growth slowed down during FY19, reflecting a caution over a liquidity crisis in the non-banking finance sector. The total credit book, including distressed advances, stood at Rs 43,510 crore in FY19, marginally up from Rs 42,010 crore in FY18. 

Retail credit rose to Rs 18,075 crore from Rs 18,188 crore during FY19. 

The corporate credit book shrunk to Rs 18,055 crore from Rs 19,525 crore during FY19. 

In the medium-term, credit book growth will be driven by a focus on SME and retail mortgage as key growth vectors. Credit growth is expected to be back in double digits as liquidity situation improves in the system, Shah added. Asset quality of the overall credit book continued to remain under control with gross NPAs at 1.87 per cent and net NPAs at 0.83 per cent.

The company continues to focus on strengthening the balance sheet by raising equity as well as long-term debt.