Edel Finance Company Limited 'Crisil A+/Stable' assigned to Non Convertible Debentures
Rating Action
^Transferred from Edelweiss Retail Finance Limited pursuant to scheme of merger effective from September 30, 2025 Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale Crisil Ratings has assigned its ‘Crisil A+/Stable’ rating to the Rs. 500 crore non convertible debentures (NCDs) of Edel Finance Company Limited (EFCL) and has reaffirmed its ‘Crisil A+/Crisil PPMLD A+/Stable/Crisil PPMLD A1+/Crisil A1+’ ratings on the company’s existing debt instruments.
On February 10, 2026, Edelweiss Financial Services (EFSL) announced that the investment funds affiliated with Carlyle will acquire a strategic majority stake in Nido Home Finance. As part of the transaction, investment funds affiliated with Carlyle Asia Partners (CAP) will invest Rs 2,100 Cr which includes acquiring a 45% stake in Nido from Edelweiss Financial Services, the company's ultimate parent, through a secondary purchase and subsequently infuse Rs 1,500 crore for approximately 28% of the balance share via primary equity capital. This investment is expected to result in Carlyle holding approximately 73% stake in NHFL, with the Edelweiss group retaining the remaining stake through its subsidiaries. Further, Aditya Puri, Senior Advisor to Carlyle in Asia, and former CEO and Managing Director of HDFC Bank, will also participate as an investor.
The transaction is subject to regulatory approvals of the Reserve Bank of India, National Housing Bank, Competition Commission of India, and other condition precedents customary to a transaction of this nature
Carlyle is a global investment firm that deploys private capital across three business segments: Global Private Equity, Global Credit, and Carlyle AlpInvest with USD 477 billion of assets under management as of December 31, 2025. The company has previously invested in the housing finance sector in India. Moreover, Carlyle was an investor in EFSL from 2011 to 2017.
The existing analytical approach combines the business and financial risk profiles of EFSL and its subsidiaries (including NHFL). This is because all the entities, collectively referred to as the Edelweiss group, have significant operational, financial and managerial linkages.
Following the completion of the transaction, the analytical approach for EFSL and its subsidiaries will remain unchanged. However, as Nido will no longer be a subsidiary, it will be deconsolidated. Crisil Ratings believes that the change in Nido's status from a subsidiary to an investment will not impact the rating of the consolidated entity.
The ratings continue to be supported by the Edelweiss group’s adequate capitalisation and diversified business risk profile with good market position in the asset reconstruction and asset management businesses. The ratings are constrained by modest profitability and a monitorable portfolio despite of ongoing recoveries. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of EFSL and its subsidiaries (including EFCL). This is because all the entities, collectively referred to as the Edelweiss group, have significant operational, financial and managerial linkages.
Please refer to Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Adequate capitalisation, supported by multiple capital raises The Edelweiss group has demonstrated its ability to raise capital from global investors across businesses. The group has raised ~Rs 6,000 crore since 2016 across lending, wealth management and asset management businesses. This has helped the group maintain its capital position despite elevated credit cost and absorb asset-side risks. As on March 31, 2025, the group’s networth stood at Rs 5,918 crore as against Rs 6,309 crore as on March 31, 2024 (Rs 8,581 crore as on March 31, 2023). The decline in networth in fiscal 2025 is attributed to a strategic mark down in the security receipts (SR) book. Previously, the reduction in networth was due to the distribution of ~30% of Nuvama’s networth to EFSL shareholders as part of the demerger.
The networth reduced to Rs 5,636 crore as on September 30, 2025, primarily due to dividend distributions by the asset reconstruction business as well as EFSL and hardening of yields resulting in some investment losses in the insurance business. It stood at Rs 5,866 crore as on December 31, 2025.
The group’s gearing stood at 3.02 times (excluding CBLO[1], 2.6 times) as on March 31, 2025, compared with 3.2 times (excluding CBLO, 2.9 times) as on March 31, 2024 (2.4 times as on March 31, 2023, and 2.5 times as on March 31, 2022). It increased to 3.5 times (excluding CBLO 2.9 times) as on December 31, 2025.
While the group has reduced its net debt from Rs 18,550 crore as on March 31, 2022, to Rs 11,170 crore as on March 31, 2025, the net debt remained elevated at Rs 11,390 crore as on December 31, 2025, due to higher debt in the group’s corporate entities.
The group's focus on fee-based businesses is expected to keep net debt requirement low. Additionally, planned value unlocking in various businesses, recoveries in wholesale exposures, upstreaming of dividends and monetisation of other investments in properties is expected to aid debt reduction. Proceeds from recent stake sales, including 10% in the mutual fund business to Westbridge Capital, will also help reduce debt. Further stake sales are planned in alternative assets, and potentially insurance businesses, which will unlock capital and facilitate debt reduction.
The group’s ability to reduce its debt while maintaining adequate levels of capitalisation and gearing will remain monitorable.
Diversified business risk profile The Edelweiss group is a diversified financial services conglomerate with presence across four key verticals: asset management, asset reconstruction, credit (wholesale and retail) and insurance (life and general). Having established a leading position in the alternative assets and asset reconstruction businesses, the group is now focused on expanding its market share in other segments, which is expected to contribute to greater earnings stability over time.
The asset management business encompasses both mutual fund and alternative asset operations. As a prominent player in the alternative asset space, the group has consistently demonstrated growth in its annual revenue recurring (ARR) assets under management (AUM), which increased to Rs 47,670 crore as on September 30, 2025, from Rs 45,310 crore as on March 31, 2025 (Rs 38,192 crore as on March 31, 2024). The mutual fund AUM also scaled up to Rs 165300 crore as on December 31, 2025 from Rs 141,800 crore as on March 31, 2025 (Rs 127,000 crore as on March 31, 2024).
In the distressed assets segment, Edelweiss Asset Reconstruction Company (EARC) maintains a good market position as one of the top five private asset reconstruction companies (ARC) in India. EARC's AUM was ~Rs 14,717 crore as on March 31, 2025, declining from Rs 31,590 crore as on March 31, 2024, following the write-off of its 5:95 portfolio as well as some 15:85 portfolio, which had completed over eight years. The AUM declined to Rs 11,491 crore as on September 30, 2025, due to slower acquisitions in line with the industry trend, and higher redemptions of large wholesale exposures. As on December 31, 2025, the fee-paying AUM stood at Rs 9,479 crore as against Rs 12,163 crore as on March 31, 2025.
Having previously focused on wholesale assets, EARC has now shifted its attention to the retail and MSME segments, which are less AUM accretive. The company expects the share of retail and MSME assets to increase over the medium term.
In the lending business, the group has been focusing on retail (mortgage and MSME loans) through a co-lending model, while reducing its wholesale book. However, retail disbursements have been slower than expected due to delays in onboarding and underwriting with co-lending partners, as well as regulatory changes pertaining to colending business. The regulatory embargo on ECL Finance has had a residual impact on growth across the lending businesses. As a result, retail AUM has grown modestly: Rs 4,879 crore (March 2023), Rs 5,368 crore (March 2024), Rs 5,378 crore (March 2025), and Rs 5,944 crore (December 2025). The wholesale loan book has continued to decline, reaching Rs 306 crore by December 2025.
The group also houses the life and general insurance businesses, which are gaining scale and are expected to break even by fiscal 2027.
However, divestment of majority stakes in some of the businesses of the group may reduce the diversity of business risk profile. [1]Collateralised borrowing and lending obligation |
Key Rating Drivers - Weaknesses Subdued profitability for current size and scale considering presence in multiple businesses The group’s profitability is lower than that of other large, financial groups, but most of its businesses have consistently reported profits since the last quarter of fiscal 2021.
In fiscal 2025, the group reported profit after tax (PAT) of Rs 536 crore, marginally higher than Rs 528 crore in fiscal 2024. The return on assets (RoA) improved to 1.3% from 1.2%. In the past few years, the profit was largely supported by gains on investments in Nuvama, wherein the group witnessed considerable fair valuation gains.
PAT of operating businesses, stood at Rs 327 crore for the nine months of fiscal 2026 compared with Rs 370 crore PAT of operating business stood at in the corresponding period of the previous fiscal (Rs 566 crore and Rs 458 crore for fiscals 2025 and 2024, respectively). This included one time impact of Rs 125 crore, pertaining to labour code impact, ESOP expenses across businesses and GST impact in Life Insurance. Furthermore, the group has incurred a management overlay of Rs 920 crore on its discontinued security receipts. Over first nine months of fiscal 2026, the group reported a PAT of Rs 549 crore with RoA of 1.6% as compared to a PAT of Rs 378 crore and RoA of 1.2%. The profitability was supported by deferred tax asset creation during the period, sale proceeds from Edelweiss Asset Management Limited and fair valuation of remaining stake in EAML.
Although the group's overall profitability is still affected by losses in the insurance business, the losses have been on a declining trend and the entities are expected to break even in the next 1-2 fiscals
Profitability in the credit businesses has also remained subdued over the years. The NBFC business has benefited from recoveries in the erstwhile wholesale portfolio (reflected in net gain on fair value changes). While the housing business is profitable, profitability in MSME business is impacted as the platform continues to scale.
The corporate segment, which comprises 11 entities of the group and is engaged in investments, corporate services, merchant banking, technology services, portfolio management services, and trading, continues to report intermittent quarterly losses. These losses can be attributed to the high interest cost associated with the debt in these entities. This debt accounts for a significant proportion of the group’s total gross debt (59% of gross debt, excluding CBLO, as of September 30, 2025). The event-based gains in this segment can offset these losses, as and when these gains happen. On a full year basis, in past three fiscals, the maximum loss incurred in the segment has been ~Rs 51 crore. In Q3 FY26, this segment reported a profit of Rs 239 crore supported by the stake sale in EAML.
Of the various businesses, the asset reconstruction and asset management businesses, mainly alternative assets, remain the largest contributors to overall profitability (forming 90% of the overall PAT[2] for fiscal 2025). Notably, EARC’s profitability was supported by healthy redemptions even as there were nil acquisitions during the embargo period.
Looking ahead, the alternative assets business is expected to continue supporting profitability.
However, any additional provisioning required on the monitorable book based on the pace and extent of recovery from underlying assets will need to be closely monitored.
Furthermore, the group's ability to maintain profits in the asset reconstruction business across business cycles, grow retail lending while controlling credit costs, and reduce corporate debt and associated costs will be crucial and a key focus area over the medium term
Asset quality monitorable with elevated level of monitorable portfolio The overall gross stage III assets in the lending business of the group stood at Rs 441 crore (7.7% of loans) as on December 31, 2025, compared with Rs 416 crore (7.9% of loans) as on March 31, 2025, Rs 720 crore (13.0%) as on March 31, 2024, Rs 794 crore (10.5%) as on March 31, 2023, and Rs 930 crore (8.9%) as on March 31, 2022. Retail gross stage III assets were reported at Rs 130 crore (2.8%) as on December 31, 2025, as against Rs 105 crore (2.3%) as on March 31, 2025, Rs 78 crore (1.84%) as on March 31, 2024, and Rs 124 crore (3.3%) as on March 31, 2023. The headline metrics remain elevated on the back of a declining loan book.
The group has been consciously running down the wholesale portfolio through various modes. While recoveries have also contributed, the reduction has been primarily due to sell-down to ARCs (both internal and external) and alternative investment funds (AIFs) in earlier periods.
The Edelweiss group has retained risks and rewards on a large portion of this and hence, Crisil Ratings tracks the monitorable portfolio to assess the asset quality of the group. This includes gross stage III accounts in the lending book (Rs 441 crore), security receipts held by the group (including those in EARC) related to sell down transactions (Rs 5,464 crore) and loans sold down to AIFs (Rs 1,091 crore). As of December 31, 2025, the overall monitorable portfolio stood at Rs 6,997 crore as marginally lower than Rs 7,446 crore as on March 31, 2025. Although, the monitorable portfolio has decreased from Rs 12,097 crore as on March 31, 2022 (and Rs 11,383 crore as on March 31, 2021), it remains at an elevated level. Crisil Ratings notes that while majority of this monitorable portfolio represents on-book exposure of the Edelweiss group, a portion of it pertains to exposure of external ARC or AIF wherein the group has extended a put option.
The group has made provisions of 54% against the outstanding monitorable portfolio resulting in a net monitorable portfolio of Rs 3,240 crore as on December 31, 2025, compared with Rs 4,366 crore as on March 31, 2025, and Rs 6,018 crore as on March 31, 2024. According to management estimates, there is a reasonable level of collateral cover for most of the portfolio, providing some protection against potential losses.
However, any disruptions to the planned recoveries could necessitate higher provisioning and likely exert pressure on the group’s profitability. As such, the group's ability to realize the expected recoveries from the monitorable portfolio will remain a key area of focus and monitoring. [2]Excluding both insurance entities and corporate business, which are currently loss making |
Liquidity Adequate As on February 28, 2026, the group had liquidity of Rs 5,200 crore, of which Rs 1,815 crore was in the form of bank balances, fixed deposits and investments in mutual funds, Rs 3,144 crore in the form of liquid treasury book, and Rs 241 crore in the form of available lines. This is sufficient to meet near term debt obligations and operating expenses, even after assuming nil business inflow and no incremental fund raising. Furthermore, the group’s liquidity is expected to be supported by contractual receivables from the retail book and ongoing recoveries from wholesale exposures and the planned stake sales. |
Outlook Stable The Stable outlook factors in the group’s strengthened liquidity and flexibility to raise additional capital through asset monetisation avenues, if needed. |
Rating Sensitivity Factors Upward factors
Downward factors
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About the Company EFCL is a non-banking finance company registered with the RBI. The public limited company, which was incorporated in 1989, has received in-principle approval to operate as a core investment company (CIC). It operates in the securities, commodity contracts, and other financial Investments and related activities. As on September 30, 2025, on a standalone basis, the company had total assets of Rs 9,128 crore.
On a standalone basis, EFCL reported a net loss of Rs 3 crore on total income (net off interest expense) of Rs 105 crore for fiscal 2025 as against Rs 79 crore on total income (net off interest expense) of 28 crore for fiscal 2024.
For nine months of fiscal 2026, the company reported a profit of Rs 338 crore as against a profit of Rs 140 crore during the corresponding period of previous fiscal |
About the Group The Edelweiss group comprised 27 subsidiaries and associates as on September 30, 2025. The group had 255 offices in 135 cities as on March 31, 2025. As part of streamlining its operating structure, including reducing the number of group entities from 74 as on March 31, 2016, the group has restructured the businesses into four verticals — credit, insurance, asset management and asset reconstruction.
The group is present across alternative and domestic asset management, asset reconstruction, loans to individuals, mortgage finance - loans against property and small-ticket housing loans, MSME finance, and life and general insurance. In addition, the group has a corporate business which functions as an investment vertical and houses the treasury management function as well.
On a consolidated basis, the group reported PAT of Rs 536 crore on a total income (net off interest expense) of Rs 6,982 crore for fiscal 2025, as against PAT of Rs 528 crore on a total income of Rs 6,815 crore for fiscal 2024.
For the first nine months of fiscal 2026, the group reported PAT of Rs 549 crore on a total income of Rs 8,896 crore, as against PAT of Rs 378 crore on total income of Rs 7,175 crore for the corresponding period of the previous fiscal. |
Key Financial Indicators: EFSL (consolidated)
^Refers to gross stage III of the on balance sheet loan book. The reported gross stage III assets as per annual report is Rs 7,693 crore as on March 31, 2025, Rs 9,604 crore as on March 31, 2024, and Rs 13,155 crore as on March 31, 2023. Net Stage III was Rs 4,546, Rs 6,228 crore and Rs 8,313 crore, respectively. These include stage III assets in EARC on monitorable book sold down by ECL Finance, interest accrued on non-performing assets and stage III assets held by group entities other than NBFCs on trade and general-purpose advances.
*as on September 30, 2025 |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - List of Entities Consolidated
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Criteria Details
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