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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Non Convertible Debentures (NCD) | 400.00 | ACUITE A | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 300.00 | ACUITE A+ | Stable | Reaffirmed | - |
| Commercial Paper (CP) | 500.00 | - | ACUITE A1+ | Reaffirmed |
| Total Outstanding | 1200.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating to ‘ACUITE A’ (read as ACUITE A) on the Rs. 400.00 Cr. perpetual non-convertible debentures of ECL Finance Limited (ECLFL). The outlook is 'Stable'.
Acuité has reaffirmed its long-term rating of ‘ACUITE A+’ (read as ACUITE A Plus) on the Rs. 300.00 Cr. non-convertible debentures of ECL Finance Limited (ECLFL). The outlook is 'Stable'. Acuité has reaffirmed its short-term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs. 500.00 Cr. proposed commercial paper of ECL Finance Limited (ECLFL). Rationale for rating: The rating factors in Edelweiss Group’s established track record in financial services, adequate capitalisation, and comfortable liquidity profile. The rating considers the Group’s strategic intent to build the fee-based-income franchise, and on the lending side, to focus on re-building the retail loan franchise with emphasis on the co-origination model, which will likely keep it asset-light and provide additional granularity to the loan portfolio. The rating also factors in the growth in the Group’s Mutual Fund business, alternative assets AUM, and the growth in number of policies issued by the insurance business. Acuité also notes that the insurance business is expected to take around two more years before turning profitable. The rating also takes into consideration the group’s reducing debt and demonstrated resource-raising ability. Acuité believes demonstrating sustainable improvement in profitability from the regular course of business operations and revenue streams in the evolving operating environment, coupled with sustained improvement in asset quality, would remain key rating monitorables. Acuité notes the significant improvement in the Group’s PBT for FY25 at Rs 802 cr against Rs 437 cr for FY24. That said, the Group’s earning profile is also supported by fair value gains from asset revaluation and sale of businesses. Further, the ARC business continues to contribute a high share of the overall Group PBT, at around 66% for FY25. Overall asset quality indicators remained elevated at FY25, albeit improved from FY24. The Group’s Gross stage 3 assets were reported at 7.93% on March 31, 2025, compared with 13.00% on March 31, 2024. The Net Stage 3 assets stood at 2.67% at FY25, compared with 2.25% at FY24. The management continues to focus primarily on fee-based businesses, therefore, there has been a consistent decline in the Group’s overall loan book, particularly its wholesale book which is concentrated towards real estate assets. Based on Income Recognition and Asset Classification (IRAC) loan norms and reassessed expected credit loss (ECL), EFSL had re-valued security receipts (SRs), resulting in a provision incurred through other comprehensive income in the financial statement. Accordingly, ECL Finance had a markdown in the value of SRs on its balance sheet to the extent of ~Rs 1,100 cr as on March 31, 2025. The resultant impact on ECLFL’s networth was ~Rs 1,000 cr, resulting in a provision incurred through other comprehensive income in the financial statement. However, with the conversion of CCDs of ~Rs. 1,040 cr during FY25, the overall net worth of Edel Group stood at Rs. 5,918.17 Cr. (Rs. 6,049.29 Cr. as on March 31st, 2024). Acuité takes note of the disinvestment of their stake in Nido Home Finance Limited. As part of the transaction, investment funds affiliated with Carlyle Asia Partners (CAP) will invest INR 2,100 Cr. (approximately USD 230M), which includes acquiring a 45% stake in Nido Home Finance Limited from EFSL through a secondary purchase and a primary equity capital infusion of INR 1,500 Cr (approximately USD 165M) in Nido Home Finance Limited. |
| About the Company |
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Mumbai based, ECL Finance Limited was incorporated in 2005 and registered with the RBI as a non-deposit taking non-banking financial company. It is a wholly owned subsidiary of Edelweiss Group. It is focused on offering secured retail loan products, which include loan against property, real estate finance, MSME finance and structured finance.
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| About the Group |
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Incorporated in 1995, Edelweiss is a SEBI-registered merchant banker with a presence across multiple businesses in the financial services space through its subsidiaries. Currently, the Group is engaged in retail lending, alternatives, asset management, life & general insurance, and asset reconstruction. The group has restructured the businesses into four verticals namely credit, insurance, asset management and asset reconstruction. The group is present across various financial services businesses, including loans to individuals, mortgage finance - loans against property and small-ticket housing loans, MSME finance, alternative and domestic asset management, and life and general insurance. |
| Unsupported Rating |
| Not applcable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has adopted a consolidated approach on Edelweiss Financial Services Limited (EFSL) along with its subsidiaries and associates collectively referred to as ‘Edelweiss group’ (refer Annexure 2 for list of entities). The approach is driven by common promoters, shared brand name, and significant operational & financial synergies between the companies. Acuite has rated secured NCDs as well as perpetual NCDs issued by Edelweiss group companies. It is pertinent to note that, Unsecured Subordinated Non-Convertible Debentures (i.e. Perpetual NCDs) are rated at a lower level vis-à-vis the regular secured debt instruments. This is in view of the significant loss absorption characteristics associated with these perpetual instruments. The issuer may be required to skip/defer the coupon/interest payment in case of certain events such as decline in CAR below regulatory thresholds.
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| Key Rating Drivers |
| Strength |
| Strong parentage
Edelweiss Group is promoted by Mr. Rashesh Shah and Mr. Venkat Ramaswamy, who are seasoned professionals in the financial services industry with over three decades of experience. The promoters are supported by experienced professionals who are into financing, wealth, and asset management businesses. The group has a diverse business profile in financial services with presence in segments such as retail credit, wholesale lending, asset reconstruction, asset management and insurance business. The various verticals of the group as mentioned above are now under the following broad categories i.e. Credit (retail and corporate), Asset Management, Asset Reconstruction and Insurance (life and general). Diversified funding (debt & equity) profile with reducing debt The group’s financial flexibility is supported by its demonstrated ability to mobilise resources from a diversified set of lenders & investors comprising domestic banks, institutional investors and lenders, foreign investors, and domestic retail investors, amongst others. The Group has attracted investments from reputed international investors such as CDPQ (Caisse de Dépôt et Placement du Québec), and PAG Asia. In the past, the Group also raised capital from KORA Management and Sanaka Capital. As on March 31, 2025, borrowings stood at Rs. 18,004.34 Cr vs Rs. 20,358.30 cr for March 31, 2024. The Group had consolidated loan book of Rs. 12,221.30 Cr. as on March 31, 2025 as against Rs. 14,804.03 Cr. as on March 31, 2024. Acuité expects the Group to continue to benefit from diversified funding mix across domestic banks, Institutional investors and lenders, foreign investors and domestic retail investors amongst others. Adequate liquidity buffer and reduced gearing levels As on March 31, 2025 the Group's net worth stood at Rs. 5,918.17 Cr. (Rs. 6,049.29 Cr. as on March 31st, 2024). Concurrently, capital adequacy of the NBFC business (ECL Finance Ltd) stood at 32.9 percent and HFC stood at 33.6 percent as on March 31, 2025. The Group had total liquidity of Rs 4,255 Cr. (including overnight liquidable assets of Rs 3,424 Cr.) as on March 31, 2025. Overall gearing (Debt/Equity) for the Group was at 3.04x as on March 31, 2025, a reduction from 3.36x at March 31, 2024. Edelweiss Group’s strategic intent on re-building its retail loan franchise with focus on the co-origination model, should keep it asset-light and provide granularity to the loan portfolio The Group has been attempting to gradually increase its exposure to the retail segment and has entered into deals with multiple banks for lending under the co-origination model. It has taken several steps to reduce its exposure to the wholesale segment and reorient the portfolio toward small and mid-corporate lending segments. Besides the fund-based activities, Edelweiss Group also has an established franchise in asset management. Acuité believes Edelweiss group’s established position in financial services and diversified range of fee and fund-based product offerings will continue to support its business risk profile. Growth in the Group’s Mutual Fund business, Alternative assets AUM, and growth in number of policies issued by the insurance business As on March 31, 2025, the Edelweiss Group had mutual fund assets under management of about Rs. 1,41,800 Cr. (up ~11.6% from ~Rs. 1,27,000 Cr. on March 31, 2024). The Group’s Alternative Assets business, EAAA India Alternatives Ltd (EAAA) also registered a PAT of Rs. 230 Cr. on March 31, 2025 (Rs. 175 Cr. on March 31, 2024) and total AUM of Rs. 59,640 Cr. (up ~9% from Rs. 54,680 Cr. at March 31, 2024). The Group’s General Insurance business (Zuno General Insurance) issued 6 lakh policies in the year, up 38% YoY. The Group’s Life Insurance business reported a Gross premium of Rs. 2,086 Cr. in FY25, up ~8% YoY. While both the insurance businesses reported net losses during FY25, the Edelweiss Group management expects them to breakeven over the next two fiscals. |
| Weakness |
| Continued pressure on asset quality, though FY25 delinquency ratios improved y-o-y
The decline in the Group’s overall loan book continued; overall loans were down ~17.4% during FY25 (driven by the reduction in wholesale loans in the ECL Finance NBFC). Overall asset quality indicators remained elevated at FY25, albeit improved from FY24. The Group’s Gross stage 3 assets were reported at 7.93% on March 31, 2025, compared with Gross stage 3 assets 13.00% on March 31, 2024. The Net Stage 3 assets stood at 2.67% at FY25, compared with 2.25% at FY24. The group’s wholesale segment mostly comprises exposures to real estate developers for their projects. The cash flows of these realtors and the quality of these exposures is linked to the revival in the real estate cycle. The Group has already initiated steps to prune its exposure to the wholesale segment through various initiatives such as slowing down fresh sanctions and sell down of existing assets to dedicated funds and ARCs. Acuité believes that the Group’s ability to significantly improve - and sustain the improvement in - overall asset quality over the near-to-medium term will remain a key rating sensitivity. Moderate overall earnings profile The Group reported a consolidated profit after tax of Rs. 535.82 Cr. in FY2025 as against Rs. 528.05 Cr. in FY2024, which had improved against Rs. 405.56 Cr. in FY2023. The earnings profile continued some dependency on fair value gains from asset revaluation and sale of businesses. That said, the Group’s overall ROAA upticked to 1.32% in FY25, as against 1.25% in FY24. The RoAA had continuously been lower than 1.00% for the three fiscals prior to FY2024. Acuité also takes note of measures taken by the Group to rationalize cost and improve profitability including co-lending model for building the retail portfolio and focus on non-fund business streams. Acuité believes that the Group’s ability to sustain improvement in earnings profile from the regular course of business in the current operating environment (coupled with the intense competition in the retail segment), will be a key rating monitorable. |
| ESG Factors Relevant for Rating |
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Edelweiss Group offers a bouquet of financial services to a diversified client base across domestic and global geographies. The Group has presence in segments such as retail credit, asset reconstruction, asset management and insurance business. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behaviour. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry.
Edelweiss Group’s board comprises of seven directors with two women directors. Of the total seven directors, four are independent directors. The Group maintains adequate disclosures for business ethics which can be inferred from its policies relating to code of conduct, whistle blower protection and related party transactions. The Group has formed a Risk Committee with four out of five members being independent directors for, among other things, identifying and evaluating risks and development, implementing and tracking risk management efforts. All the members of Audit Committee are independent directors. For redressal of grievances of the security holders, it has constituted a Stakeholders’ Relationship Committee. The Group also has a committee for appointment, remuneration and performance evaluation of the Board. On the social aspect, the Group has taken development and training initiatives towards career development of its employees. The Group has put in place data privacy policy to ensure adequate safeguards for collection, storage and processing of personal and sensitive information and data of customers and third parties. Further, the Group has set up EdelGive foundation, a grant-making foundation which is funding and supporting the growth of small to mid-sized grassroots NGOs committed to empowering vulnerable children, women, and communities. Over the last 13 years, EdelGive has supported over 150 organizations across 111 districts in 14 states of India. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| EFSL’s liquidity profile is supported by the Group’s adequate liquidity position. As on March 31, 2025, the Group had total liquidity of Rs 4,255 Cr. (including overnight liquidable assets of Rs 3,424 Cr). The Group’s liquidity profile is supported by funding from a diversified base i.e. banks and financial institutions, along with capital market instruments such as Commercial Paper and NCDs. |
| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income |
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| Key Financials (Consolidated) | ||||||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income |
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| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Commercial Paper: https://www.acuite.in/view-rating-criteria-54.htm |
| Note on complexity levels of the rated instrument |
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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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