MKVenures RI issue review (May apply)

• MCL is in the business of trading/investing in securities and lending.
• It has posted superb performance since FY21.
• The RI is at a discount of 27.13% based on its last traded price of Rs. 1284.50
• The promoter's holding is 83.66% and it may have to dilute to 75% to stay listed.
• Well-informed/risk seekers may consider parking funds.

ABOUT COMPANY:
MKVentures Capital Ltd. (MCL) was originally incorporated in 1991 as Kakani Textiles Ltd. and subsequently, it changed its name to Hindustan Sanforisers Ltd. in 1993, then to IKAB Securities & Investments Ltd. in 1998 and then to its current name in 2022. Currently, it is a non-deposit-taking Non-Banking, Financial Company and is registered with RBI.

It was engaged in providing DP services for CDSL and NSDL and also being a member of BSE and NSE as a trading member. However, it initiated the surrendering of its DP and Exchange membership, but SEBI has kept it on hold due to pending adjudication proceeding against IKAB and their erstwhile promoters. Now that SAT has dismissed the SEBI order, MCL has initiated the surrender process afresh.

MCL has chosen BSE as its designated exchange to carry on its current business of trading/investment in shares and securities as well as the lending of funds. As of December 31, 2022, it had just 3 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 427050 equity shares of Rs. 10 each at a fixed price of Rs.936 per share to mobilize Rs. 39.97 cr. The issue opens for subscription on April 17, 2023, and will close on April 25, 2023. MCL is offering RI in the ratio of 1 for 8 to eligible stakeholders as of the record date of April 04, 2023. The full money is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. MCL is spending Rs. 0.50 cr. for this RI process and from the net proceeds, it will utilize Rs. 38.97 cr. for augmenting its capital base and funding for its NBFC activities, and Rs. 0.50 cr. for general corporate purposes.

Choice Capital Advisors Pvt. Ltd. is the sole lead manager and Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, MCL's current paid-up equity capital of Rs. 3.42 cr. will stand enhanced to Rs. 3.84 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 359.75cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, MCL has posted a total income/net profit - (loss) of Rs.1.58 cr. / Rs. - (1.16) cr. (FY20), Rs. 8.31 cr. / Rs. 2.26 cr. (FY21), and Rs.13.72 cr. / Rs. 4.70 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 11.13 cr. on a total income of Rs. 16.90 cr.

DIVIDEND POLICY:
The company has not declared any dividends for the last five years. 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: 514238 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 1129.00 on March 31, 2023, and opened on an ex-right basis at Rs. 1107.00 on April 03, 2023. Since then, it has marked a high/low of Rs. 1365.00 / Rs. 1107.00. The scrip last closed at Rs. 1284.50 as of April 13, 2023. For the last 52 weeks, it has posted a high/low of Rs. 1726.56 / Rs. 544.46.

The new management opted for a voluntary delisting process in July 2022, but could not succeed.

The promoters' holding has been constant at 83.66% for the last two quarters ended on December 31, 2022. The counter is well managed above the RI offer price to lure investors.

Conclusion / Investment Strategy

The issue is at a discount of around 27.13% based on its last traded price and looks appealing. The promoter’s holding at 83.66% will have to be diluted to 75% to stay listed or it may opt for delisting afresh. Its matter is pending with SEBI on regulatory aspects. Thus uncertainty prevails. Hence well-informed/risk seekers may consider parking funds.

Review By Dilip Davda on April 16, 2023

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 ).

More MKVentures Capital Limited RI Views / Analysis / Recommendations ...

MKVentures Capital Limited Review by Dilip Davda

The MKVentures Capital Rights Issue 2023 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 MKVentures Capital Rights Issue 2023 worth investing. The MKVentures Capital Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if MKVentures Capital Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in MKVentures Capital Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

MKVenures RI issue review (May apply)

Conclusion / Investment Strategy

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