Mercury Trade Nov. 24 RI review (Avoid)

• This is the 2nd Rights Issue from the company since March 2024.
• First RI was at a price of Rs. 40.00 per share to mobilize Rs. 9.90 cr.
• For this RI is has fixed a price of Rs. 44.95 to mobilize Rs. 48.95 cr.
• Based on its financial performance so far, the RI appears aggressively priced.
• It is operating in a highly competitive and fragmented segment.
• NIL promoters' holding raises alert and nearly five and half fold jump in post-RI equity poses concern.
• There is no harm in skipping this High Risk/Low Return" pricey offer.

ABOUT COMPANY:
Mercury Trade Links Ltd. (MTLL) is engaged in the business of trading of agricultural commodities such as wheat, rice, maize, vegetables including capsicum, onion, tomato, potato etc and other agricultural products. The company sources the agricultural products from the manufacturers by paying an advance payment or as per agreed terms and then these products are sold to network of distributors. Owing to its presence in the market, the company has built strong relationships with both the farmers as well as with the wholesaler/retailers' community.

Main objects of the company to trade in all sort of commodities, metals, pharma products, etc. etc. As of the date of filing this offer document, it had just 7 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its 2nd Rights Issue (RI) of 10890000 equity shares of Rs. 10 each at a fixed price of Rs. 44.95 per share to mobilize Rs. 48.95 cr. Its previous RI was in the month of March 2024. The RI opens for subscription on November 07, 2024, and will close on December 05, 2024. The company is offering RI in the ratio of 4 for 1 to its eligible stakeholders as of the record date of October 24, 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. 0.25 cr. for this RI process, and from the net proceeds, it will utilize Rs. 36.94 cr. for working capital, and Rs. 11.76 cr. for general corporate purposes.

The issue 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. 2.72 cr. will stand enhanced to Rs. 13.61 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 61.19 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income/net profit of Rs. 0.48 cr. / Rs. 0.01 cr. (FY23), Rs. 13.836 cr. / Rs. 1.14 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 0.71 cr. on a total income of Rs. 8.04 cr. Thus it marked sudden boost in its top and bottom lines from FY24 onwards.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 512415 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 73.34 on October 23, 2024, and opened on an ex-right basis at Rs. 49.59 on October 24, 2024. Since then, it has marked high/low of Rs. 60.43 / Rs. 49.59. The scrip last closed at Rs. 60.43 as of November 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 60.43/ Rs. 2.24. The counter is currently under ESM: stage 2.

The promoters' holding has been constant at 0.00% for the last three quarters ended September 30, 2024. The counter is well managed above RI pricing. Based on its market price movements, the RI appears to be lucratively priced. Vested interest parties are active in full force to jack up the price of the counter to tempt investors.

Conclusion / Investment Strategy

The company is engaged in the business of trading all sort of agri commodities, metals, pharma etc. Its financial performance is not in line with the asking price. This is the second RI from the company within just 8 months that raises eyebrows. There is no harm in skipping this “High Risk/Low Return” pricey offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on November 6, 2024

Review Author

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 Mercury Trade Links Rights Issue October 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 Mercury Trade Links Rights Issue October 2024 worth investing. The Mercury Trade Links Rights Issue October 2024 Note sets the Rights Issue expectations in systematic way which tells you if Mercury Trade Links Rights Issue October 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Mercury Trade Links Rights Issue October 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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Mercury Trade Nov. 24 RI review (Avoid)

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