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• The company is coming out with its composite issue of RI + FPO to mobilize Rs. 450 cr.
• The RI is between July 15, 2024 to July 22, 2024, and FPO time line is July 22, 2024 to July 24, 2024.
• The company came with its maiden IPO for Rs. 24.75 cr. in November 2023 at a price of Rs. 55 per share of Rs. 2.
• This round of Rs. 450 cr. issue raises eyebrows and concern over continued succession of the trends.
• Well-informed investors may park moderate funds for the medium to long term.
PREFACE:
Perhaps this is happening for the first time that a company has received permission from regulators for its composite issue that includes FPO (Further Public Offer) of Rs. 150 cr. and a Rights Issue (RI) amounting to Rs. 300 cr. making an overall size of the issue worth Rs. 450 cr. While FPO of Rs. 150 cr. (approx. 7143000 shares at the upper cap or 7500000 shares at the lower cap) is scheduled between July 22, 2024 and July 24, 2024 and has a price band of Rs. 200 - Rs. 210 per share of Rs. 2 each and a RI of Rs.300 cr. with a fixed price of Rs. 200 per share of Rs. 2 each. For FPO, the minimum lot of application will be 500 shares and in multiples thereon, thereafter. And RI is issued in the ratio of 1 share for every 1 share held as of the record date of July 09, 2024. Time line for RI is from July 15, 2024 to July 22, 2024. Thus the FPO opens on the closure day of RI. For both this issues, the market lot is kept at 500 shares and in multiples thereon, thereafter.
The company came with its maiden IPO of Rs. 24.75 cr. at a price of Rs. 52 - Rs. 55 per share of Rs. 2 each in the month of November 2023. For the IPO, the market maker was R K Stock Holding Pvt. Ltd., while for this composite issue, the market maker is Asit C Mehta Investment Intermediates Ltd.
ABOUT COMPANY:
SAR Televenture Ltd. (STL) is engaged in telecommunication solutions related services. As of May 31, 2024, it had 413 towers installation in operation. Its tower installation posted inconsistency with 108 towers installations in FY22, 140 installations in FY23 and only 40 installations in FY24.
On January 03, 2023, the Company has entered into share purchase agreement to acquire 100% of the issued and paid-up equity share capital of SAR Televentures F.Z.E, United Arab Emirates (formerly known as Shoora International -F.Z.E) from Shoora Capital Limited. Its subsidiary is currently engaged in the business of laying and installation of fiber cables and trading of network equipment. As part of its strategy, STL intends to enter the business vertical of installing Fiber to the Home (FTTH), which is a broadband internet connection technology that uses optical fiber to deliver high speed broadband internet directly to households.
In the opinion of the management of the Company, since the date of the last financial statements disclosed in this Offer Document, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business activities or profitability of the Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.
Its business operations, services, revenue, and performances are directly related to the performance of the Indian wireless telecommunication industry and FTTH services and is therefore affected by factors that generally affect and drive that industry. The wireless telecommunications and the FTTH industry is sensitive to factors such as consumer demand and wireless telecommunications service providers' debt levels and other obligations and general economic conditions. In addition, the Indian telecommunications industry may face policy changes in response to recent industry developments
and change in regulation. In the event of a decrease or stagnation in demand for wireless telecommunications services in India, any developments that make the provision of tower infrastructure or FTTH service less economically beneficial, the company may experience a material adverse effect on its business, prospects, results of operations, and financial condition.
According to the management, its debt equity ratio of 2.48 as of March 31, 2024, will get drastically reduced post-RI, as borrowings from promoters will get adjusted against their rights entitlement.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 15000000 equity shares of Rs. 2 each at a fixed price of Rs. 200 per share to mobilize Rs. 300 cr. The RI opens for subscription on July 15, 2024, and will close on July 22, 2024. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of July 03, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE SME Emerge. From the Rs. 450 cr. overall issue net proceeds, the company will utilize Rs. 273.00 cr. for FTTH network solutions for 3 lakh home passes, Rs. 42.50 cr. for additional 4G/5G towers, Rs. 30.00 cr. for working capital and the rest for general corporate purposes.
Post-RI, its current paid-up equity capital of Rs. 3.00 cr. will stand enhanced to Rs. 6.00 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 600 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. 4.75 cr. / Rs. 0.04 cr. (FY22), Rs. 32.52 cr. / Rs. 3.94 cr. (FY23), and Rs. 124.17 cr. / Rs. 15.66 cr. (FY24). The sudden boost in its top and bottom lines in a pre-issue year raise eyebrows and concern over its sustainability going forward.
Post planned expansion going on stream, the company hopes to outperform and is confident of posting better numbers in coming years.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has already adopted a prudent dividend policy in July 2023, based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: SARTELE (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 272.05 on July 08, 2024, and opened on an ex-right basis at Rs. 237.00 on July 09, 2024. Since then, it has marked a high/low of Rs. 260.80 / Rs. 236.00. The scrip last closed at Rs. 242.45 as of July 11, 2023. For the last 52 weeks' it has posted a high/low of Rs. 288.74 / Rs. 78.52.
The promoters' holding has been constant at 66.26% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to tempt 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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. 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 SAR Televenture 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 SAR Televenture Rights Issue 2024 worth investing. The SAR Televenture Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if SAR Televenture Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in SAR Televenture Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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