Brickwork has reaffirmed the rating of Edelweiss Financial Services' non-convertible debentures (NCDs) at AA with negative outlook due to mounting pressure on the company's asset quality.
The rating continues to factor in diversified business profile of the group, experienced management team, adequate capitalisation and adequate liquidity cushion to meet its debt repayments.
However, it is constrained by deterioration in asset quality, mainly in wholesale mortgage and structured collateralised credit segments and high impairment costs impacting the profitability of the group, said the rating agency.
The continuation of negative outlook is due to the stress in the wholesale book and expectation of continued pressure on the asset quality, thereby impacting the profitability of the group. The ability of the group to raise fresh funds from diverse sources is also a monitorable, said Brickwork.
Edelweiss reported a net loss of Rs 2,045 crore during FY20 compared with a profit of Rs 995 crore during FY19. The profitability was significantly impacted by increase in impairment costs.
Edelweiss, incorporated in 1995 by Rashesh Shah and Venkat Ramaswamy, is the holding company of the group. The group has a presence in diversified businesses like retail lending, wholesale lending, asset reconstruction, wealth management, asset management, broking, capital markets, life insurance and general insurance.
The promoter group holds 32.92 per cent stake while the management and employees have 12.3 per cent stake in the group which has 47 subsidiaries.
( With inputs from ANI )
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