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• IGSL is in the business of stock market related activities and services.
• It posted lucrative financial performance for the last two fiscals.
• The RI is fully priced and the counter is witnessing trade above RI price with vested interests' operations.
• There is no harm in skipping this pricey bet that appears to be "High Risk/Low Return" bet.
ABOUT COMPANY:
Inventure Growth & Securities Ltd. (IGSL) is a public limited company founded in 1995. The company has listed its securities on both the Exchange i.e. Bombay Stock Exchange and National Stock Exchange of India and is a member of various exchanges, including the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), MCX Stock Exchange (MCX-SX), Metropolitan Stock Exchange (MSE), and National Commodity and Derivatives Exchange Limited (NCDEX). IGSL is also registered as a depository participant with Central Depository Service (India) Limited (CDSL) has a AMFI registration number (Mutual Fund) and Research License.
The company is full service broker that offers a wide range of products and services to institutional clients, HNI individuals, Non Resident Individuals (NRI) and retail investors. It is primarily engaged in equity broking business with more then 20+ years of expertise. It operates through a network of 199 branches, franchisees, and Authorized person across India, ensuring that it can provide its services to clients across the country. The company provides a comprehensive suite of financial services, including equity broking, depository services, Fundamental and technical research based advice, IPO, MTF and distribution of financial products. It provides investment advice to retail clients and distributes mutual funds and insurance products.
Equity penetration in India is very low as compared to other developed countries. Growth of disposable income, internet penetration and financial inclusion is great combination for equity penetration and growth of broking industry as a whole. In order to benefit from this opportunity Management expects to expand its market reach. Company has decided to invest heavily into technology which will act as a pivotal role. In order to enhance clients trading Experience, the company has tied up with 63 Moons Technologies Ltd. to offer IGSL Aero - Desktop trading platform. Further, company has partnered with Finsto Wealth Magic to offer a mutual fund app, providing clients with convenient access to mutual fund investments.
Industry has gone through structural changes transitioning to fee based model from earlier transaction based tilting companies to increase its source of income by providing wealth management, Mutual Fund, Insurance, Investment advisory, Research of PMS services apart from brokerages charges. Cross selling of different products has become important trigger to have skin in the game by providing add-on services and retaining profitability.
The Government of India has introduced several reforms to liberalize, regulate and enhance this industry. SEBI has been empowered to investigate, examine, visit company premises, summon records and persons, and inquire and impose penalties commensurate with misconduct. The first and foremost challenge for the fledgling regulator was to create a regulatory and supervisory framework for the market, a job that proved formidable, because vested interests resisted every new step.
However, with the designing and notification of 32 regulations and guidelines, during its decade and a half of existence, the apparatus steadily evolved and has adapted to the situation. SEBI has put timelines for performance of its various functions, such as registration and renewal, on the website. These measures work as a self-disciplining mechanism within SEBI and provide full transparency to its functioning. SEBI has been undertaking tightening of regulations amid increase in derivative volume, which is likely to increase compliance cost for intermediaries and may eventually also lead to a rise in brokerage rates, though timing and extent of price revision of the same is difficult to guess.
IGSL offers a host of services under one roof providing comprehensive advisory services that are well diversified from trading services in equity cash and derivatives market, debt market, commodities and currency futures segment to financing activity, wealth management, and distributions of financial product. The Company has direct interests in equity, debt and currency futures broking, depository activities, and other activities like commodity broking, non-banking financial services, wealth management, merchant banking and sale of insurance products are provided through its Subsidiaries. As of March 31, 2024, it had 106 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 210000000 equity shares of Re. 1 at a fixed price of Rs. 2.33 per share to mobilize Rs. 48.93 cr. The RI opens for subscription on July 15, 2024, and will close on August 13, 2024. The company is offering RI in the ratio of 1 for 4 to its eligible stakeholders as of the record date of July 05, 2024. The full amount is to be paid on the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.90 cr. for this RI process and from the net proceeds, it will utilize Rs. 19.10 cr. for expansion of arbitrage and share trading business, Rs. 10.00 cr. for working capital, Rs. 15.00 cr. for expansion of margin trading facilities, and Rs. 3.93 cr. for investing in new edge proprietary technology and software. The company is additionally spending Rs. 1.62 cr. from internal accruals for expansion of arbitrage and share trading business.
The RI is self-managed by the company itself and Link Intime India Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 84.00 cr. will stand enhanced to Rs. 105 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 244.65 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 39.02 cr. / Rs. 9.26 cr. (FY23), and Rs. 62.51 cr. / Rs. 12.01 cr. (FY24). The offer document contains blurred pages for financial performance data. (Refer page nos. 75 to 126)
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. However, the offer document is silent on its dividend policy.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 533506 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.87 on July 04, 2024, and opened on an ex-right basis at Rs. 2.81 on July 05, 2024. Since then, it has marked a high/low of Rs. 2.89 / Rs. 2.61. The scrip last closed at Rs. 2.61 as of July 12, 2024. For the last 52 weeks' it has posted a high/low of Rs. 3.77 / Rs. 1.77.
The promoters' holding has been constant at 26.40% for the last three quarters ended with March 31, 2024. The counter is well managed above RI price to lure investors.
Review By Dilip Davda on July 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 Inventure Growth & Securities 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 Inventure Growth & Securities Rights Issue 2024 worth investing. The Inventure Growth & Securities Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Inventure Growth & Securities Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Inventure Growth & Securities Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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