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• The company is engaged in the financial services, that is highly competitive and fragmented segment.
• The company posted inconsistency in its financial performances for the reported periods.
• This is the second RI from the company since June 2022.
• Low promoter's holding is also a concern.
• Though this at par RI is at a discount of around 38.8%, well-informed/cash surplus investors may park moderate funds for medium term.
PREFACE:
This is the 2nd RI from the company. The last one was in June 22 at a price of Rs. 20 per share to mobilize Rs. 49.25 cr. Now it is coming with an at par price. This is really surprising. Low promoter's holding also remains a major concern along with inconsistent financial performance. This can also be termed as a "High Risk/Low return bet.
ABOUT COMPANY:
Banas Finance Ltd. (BFL) erstwhile known as Pioneer Leasing Co. Ltd. - is engaged in a diverse range of products catering to the financial services sector directly through own Company. Further, the Company is also engaged in the business of trading in shares, securities, commodities, currency Market and investment in G Sec Bonds, liquid funds and Debt Funds.
The main object of the business of the Company is purchasing, leasing, factoring, financing of hire-purchase, leasing of all kinds of plants and machineries, motor vehicles, motor boats, trawlers, launches, ships, vessels, helicopters, aircrafts, automobiles, computers or any other equipment that the Company may think fit and to assist in financing of all and every kind and description of hire purchase or deferred payment or similar transaction and all and every kind and description upon any terms whatsoever and to carry on business as investors and dealers in shares, stocks and securities, capitalists, financiers, concessionaires and to undertake, carry on and execute all kinds of financial, commercial, and trading operations (except banking and insurance business under Banking regulation Act, 1949, and the Insurance Act, 1938) to make loans both short and long term with provision of financial software such as computer programme.
Our Company's business model is centred around lending activities such as granting of loans and advances and also in the business of trading in shares, securities, commodities, currency Market and investment in G Sec Bonds, liquid funds and Debt Funds. As an NBFC, it operates in the business of providing corporate and non-corporate sector and retail customers. The company provides finance to clients after satisfying itself about the credit worthiness and repayment capacity of borrowers after evaluating the material risks associated with the business/ project/ proposal for which loan has been sought. Currently, the company does not have more than 20 employees.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 48046232 equity shares of Rs. 10 each at a par value to mobilize Rs. 48.5 cr. The RI opens for subscription on May 13, 2024, and will close on May 30, 2024. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of April 26, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.65 cr. for this RI process, and from the net proceeds, it will utilize Rs. 38.15 cr. for working capital, Rs. 9.70 cr. for general corporate purposes.
The RI is self-managed by the company itself and Purva Sharegistry (I) Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 48.04 cr. will stand enhanced to Rs. 96.05 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 96.09 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total revenue/net profit/ -(loss) of Rs. 100.94 cr. / Rs. 69.37 cr. (FY22), and Rs. 20.88 cr. / Rs. - (54.76) cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 23.37 cr. on a total revenue of Rs. 32.70 cr. Thus it posted wild swing in its top and bottom lines for the reported periods.
As per stock exchange filing, the company has posted a net profit of Rs. 17.59 cr. on a total revenue of Rs. 38.39 cr. as of 9M of FY24 ended on December 31, 2023. Thus inconsistency still persists.
DIVIDEND POLICY:
The company has not declared 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: 509053 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 19.76 on April 25, 2024, and opened on an ex-right basis at Rs. 14.88 on April 26, 2024. Since then, it has marked a high/low of Rs. 17.84 / Rs. 13.10. The scrip last closed at Rs. 13.87 as of May 10, 2024. For the last 52 weeks' it has posted a high/low of Rs. 18.83/ Rs. 9.86.
The promoters' holding has been constant at 17.59% for the last three quarters ended with March 31, 2024. The counter is well managed above the par value to lure investors.
Review By Dilip Davda on May 12, 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 Banas Finance 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 Banas Finance Rights Issue 2024 worth investing. The Banas Finance Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Banas Finance Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Banas Finance Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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