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• The company is engaged in dealing in shares, securities and other financial services.
• It posted sudden growth in its top and bottom lines from FY23 onwards.
• Based on its market price trends, the RI appears relatively fully priced.
• There is no harm in skipping this "High Risk/Low Return" bet.
PREFACE:
The company is posting hat trick of RIs since March 2022. It came with its 1st RI in March 2022, then 2nd in September 2023 and now 3rd in September 2024. It splitted its shares from Rs. 10 to Re.1 in December 2027. The last two RIs were to mobilize Rs. 49.68 cr. (@ Rs. 2.85 per share), and 49.91 cr. (@ Rs. 2.40 per share), respectively. Through this RI it mulls raising Rs. 49.95 cr.
ABOUT COMPANY:
Advik Capital Ltd. (ACL) that was originally incorporated as Quick Credit Ltd. changed its name to DU-Lite Industries Ltd. following acquisition and then to Advik Industries Ltd. and finally to Advik Capital Ltd.
ACL is a non-deposit taking Non-Banking Financial Company registered with the RBI. The Company is engaged primarily in the business of providing financial loans and in providing ancillary services related to the said business activities. The Company has submitted Expression of Interest for Acquisition of ARC (Asset Reconstruction Company) to carry on the Business of Securitization or Assets Reconstruction under SARFAESI Act.
The Company as an RBI registered NBFC has firmed up its plan to apply for license for Alternative Investment Fund Category - II (AIF) with SEBI Alternative Investment Fund Regulations. The Company, as a part of its long-term business strategy and to expand its business interest in diverse verticals, towards a Systematically Important NBFC, with elongated financial strength, having net-worth of approx. Rs. 110 cr. and total assets of approx. Rs. 200 cr.
ACL formed a subsidiary in the name of Advik Optoelectronics Limited to further diversify activities of trading and manufacturing of electronic products, and another wholly owned subsidiary in the name of Advikca Finvest Ltd. which is engaged in the business to deal in shares, securities, right interests, obligations in movable and immovable assets of all kind etc. The offer document is silent on its employees strength.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 199805013 equity shares of Re. 1 each at a fixed price of Rs. 2.50 per share to mobilize Rs. 49.95 cr. This is the third RI from the company since March 2022. The RI has already opened for subscription on September 24, 2024, and will close on October 10 2024 (revised). The company is offering RI in the ratio of 1 for 10 to its eligible stakeholders as of the record date of September 12, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.85 cr. for this RI process, and from the net proceeds, it will utilize Rs. 37.25 cr. for augmenting capital base, and Rs. 11.85 cr. for general corporate purposes.
The sole lead manager to this issue is Fast Track Finsec Pvt. Ltd., while Skyline Financial Services Pvt. Ltd. is the registrar to the issue and Hexaxis Advisors Ltd. is the advisor to the issue.
Post-RI, company's current paid-up equity capital of Rs. 42.82 cr. will stand enhanced to Rs. 62.80 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 156.99 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 46.58 cr. / Rs. 0.414 cr. (FY22), Rs. 604.37 cr. / Rs. 9.35 cr. (FY23), and Rs. 848.06 cr. / Rs. 6.36 cr. (FY24). It posted inconsistency in bottom lines for the reported periods, but boosted profits for FY23 raises eyebrows.
DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 539773 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 3.04 on September 11, 2024, and opened on an ex-right basis at Rs. 2.99 on September 12, 2024. Since then, it has marked a high/low of Rs. 3.25 / Rs. 2.70. The scrip last closed at Rs. 3.25 as of October 08, 2024. For the last 52 weeks' it has posted a high/low of Rs. 4.10 / Rs. 1.94.
The promoters' holding has been constant at 21.80% for the last three quarters ended on June 30, 2024. The counter is well managed above RI pricing, to tempt investors.
Review By Dilip Davda on October 8, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Advik Capital Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Advik Capital Rights Issue 2024 worth investing. The Advik Capital Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Advik Capital Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Advik Capital Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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