Press Release July 07, 2026 EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED Rating Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Non Convertible Debentures (NCD)	0.00	203.00	ACUITE A | Stable | Reaffirmed	-	MCA
Non Convertible Debentures (NCD)	97.00	0.00	ACUITE A | Stable | Reaffirmed	-	SEBI
Total Outstanding	97.00	203.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuite has reaffirmed the long term rating of 'ACUITE A' (read as ACUITE A) on the Rs.97.00 Cr. Secured Guaranteed Non Convertible Debentures of Edelweiss Asset Reconstruction Company Limited (EARCL). The outlook is 'Stable'. Acuite has reaffirmed the long term rating of 'ACUITE A' (read as ACUITE A) on the Rs. 203.00 Cr. proposed Secured Guaranteed Non Convertible Debentures of Edelweiss Asset Reconstruction Company Limited (EARCL). The outlook is 'Stable'. Rationale for the rating  The reaffirmation factors EARCL’s strong parentage, established track record, high capital ratio and low gearing levels. Currently, Edelweiss group holds 83.52 percent of EARCL marking the exit of CDPQ’s shareholding. EARCL is one of the leading players in the asset reconstruction industry in India having a strong networth of Rs. 2,985.49 Cr. as on March 31, 2026 with a gearing of 0.14 times. The total CRAR ratio stands high at 80.03 percent as on March 31, 2026 consisting entirely of Tier 1 capital.  However, the company’s earning profile reported a marginal decline, as denoted by a PAT of Rs. 349.53 Cr. during FY26 from Rs. 385.06 Cr. during FY25. The AUM of the company has declined from Rs. 14,539.83 Cr. as on March 31, 2025 to Rs. 9,046.76 Cr. as on March 31, 2026. This is owed to significant SR redemptions to the tune of Rs. 4,930.44 Cr. during FY2026 coupled with low SR acquisitions amounting to Rs. 492.48 Cr. for FY2026. The rating also considers the ARC industry cyclicality that could create volatility in EARCL’s earnings profile and uncertainty in recoveries. Acuite also takes note of the substantial change in revenue mix with management fees contributing less than 15 percent and larger proportion coming from profit on redemption of SRs. Going forward, EARCL’s ability to profitably grow and achieve timely resolution of assets will remain key credit monitorables.

About the company

­Mumbai based, EARCL was incorporated in October 2007 and registered with the RBI as an ARC in October 2009. The Edelweiss group currently holds 83.52% stake in EARCL, with high-networth individuals and foreign institutional investors holding the remaining stake.

About the Group

­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 Applicable

Analytical Approach

­To arrive at its rating, Acuité has considered the standalone business and financial risk profiles of EARCL.

Key Rating Drivers

Strength

­Strong parentage: Edelweiss Group’s established track record in financial services 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). As on March 31, 2026, the Edelweiss group held ~83.52% shareholding in EARCL through subsidiaries.  Established track record of EARCL EARCL is one of the leading players in the asset reconstruction industry in India. As on March 31, 2026, the AUM stood at Rs. 9,046.76 Cr. which declined from Rs. 14,539.83 Cr. as on March 31, 2025 (March 31, 2024: Rs. 31,362.85 Cr.). This is owed to significant SR redemptions to the tune of Rs. 4,930.44 Cr. during FY2026 coupled with low SR acquisitions amounting to Rs. 492.48 Cr. for FY2026. The business restriction had not affected the recovery efforts and resolution of the existing portfolio to be managed by EARCL but slowed down the acquisitions. The company’s profitability remained healthy with Rs. 349.53  Cr. PAT generated in FY26 against Rs. 385.06 Cr. in FY25. Return on average assets stood at 8.22 percent as on March 31, 2026 as compared to 7.49 percent as on March 31, 2025. High capital and low gearing levels EARCL’s total capital adequacy ratio was high at 80.03 percent as on March 31, 2026 (regulatory requirement: 15%) compared with 90.46 percent as on March 31, 2025. As of March 31, 2026, the company’s net worth stood at Rs. 2,985.49 Cr. (March 31, 2025: 3534.88 Cr.). Gearing stood comfortable at 0.14x as on March 31, 2026 (0.35x as on March 31, 2025).

Weakness

A­RC industry cyclicality could create volatility in EARCL’s earnings profile and uncertainty in recoveries   The asset reconstruction industry is subject to cyclicality which creates inherent volatility in the earnings profiles of ARCs. The ability of EARCL to procure assets at competitive pricing and the resolution time over those would play a major factor in the strength of the earning profile, owing to the nature of the industry. Given the nature of the assets, the recovery and the time frames for recoveries tend to be uncertain.

ESG Factors Relevant for Rating

­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 (including agri-finance), wholesale lending, warehousing services, 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 eight 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

Potential triggers (individual or collective) for an upward rating action:

­Expected resolution within the specified time period Growth in the AUM and subsequent impact on the earning profile

Potential triggers (individual or collective) for a downward rating action:

­Longer than envisaged delays in the resolution of large accounts Material write-offs and its impact on the earning profile High leverage more than 4 times and low liquidity buffers

All Covenants

1. Financial Covenants The Company shall maintain security cover of at least 1x times and provide additional security if the security for the Debentures becomes inadequate. The value of the Receivables and Stock in Trade and/or SRs shall at all times equal the principal and interest or any other charges as per the terms of the issue of the Debentures outstanding at any point of time. The Company may issue further debt provided the security coverage ratio remains unaffected and required asset cover is maintained. 2. Rating Covenant The Company shall comply with all rating-related regulatory requirements. 3. Reporting Covenants The Company shall provide information relating to security cover, unpaid interest, debenture holder grievances, compliance status and asset sufficiency as required by the Trustee. The Company shall inform the Trustee about any change in composition of the Board of Directors amounting to change in control.

Liquidity Position

Adequate

­EARCL’s liquidity profile is adequate. As on 31st March 2026, the company had cash and cash equivalents of Rs. 528.24 Cr. and bank balances of Rs. 203.56 Cr. against which the total borrowings stood Rs. 422.89 Cr. The cash flows of ARCs are generally uneven and a portion of revenues will depend on inflows from the resolution of SRs and upside revenues. For FY2027, the company has debt obligations of ~Rs. 287 Cr. for which the company maintains adequate liquidity. Additionally, the company is supported by a strong networth of Rs. 2,985.49 Cr. as on March 31, 2026 with a gearing of 0.14 times.

Outlook: Stable

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Other Factors affecting Rating

­ None

Key Financials - Standalone / Originator

Particulars Unit FY 26 (Actual) FY 25 (Actual) Total Assets Rs. Cr. 3525.26 4973.92 Total Income* Rs. Cr. 601.67 644.8 PAT Rs. Cr. 349.53 385.06 Net Worth Rs. Cr. 2985.49 3534.88 Return on Average Assets (RoAA) (%) 8.22 7.49 Return on Average Net Worth (RoNW) (%) 10.72 11.52 Total Debt/Tangible Net Worth(Gearing) Times 0.14 0.35 ­ *Total income equals to Total Income net off interest expense

Status of non-cooperation with previous CRA (if applicable):

­Not applicable

Any other information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Asset Reconstruction Companies: https://www.acuite.in/view-rating-criteria-85.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

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 07 Jul 2025 Secured Guaranteed Redeemable NCD Long Term 6.00 ACUITE A | Stable (Reaffirmed) Proposed Secured Guaranteed Redeemable NCD Long Term 203.00 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 3.50 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 5.00 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 36.00 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A | Stable (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 26.50 ACUITE A | Stable (Reaffirmed) 26 Dec 2024 Proposed Secured Guaranteed Redeemable NCD Long Term 203.00 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 6.00 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 3.50 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 5.00 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 26.50 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 36.00 ACUITE A (Reaffirmed) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A (Reaffirmed) 07 Jun 2024 Secured Guaranteed Redeemable NCD Long Term 6.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Proposed Secured Guaranteed Redeemable NCD Long Term 203.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 3.50 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 5.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 26.50 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 36.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A (CE) (Downgraded from ACUITE A+ (CE) | Stable) 03 Aug 2023 Secured Guaranteed Redeemable NCD Long Term 6.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Proposed Secured Guaranteed Redeemable NCD Long Term 203.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 3.50 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 5.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 26.50 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 36.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative) Secured Guaranteed Redeemable NCD Long Term 10.00 ACUITE A+ (CE) | Stable (Downgraded from ACUITE AA- (CE) | Negative)

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Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Nivedita Gokul Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

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