Savani Financial RI review (Avoid)

• The company has no employee on its payroll as of now.
• It is gearing to start the financial services and recruit the necessary staff.
• It marked minuscule financial performance with rising losses for FY23 and 9M-FY24.
• As of December 31, 2023, its equity of Rs. 4.00 cr. has a negative reserve of Rs. - (3.02) cr.
• The counter is well managed to lure investors to participate this "High Risk/No Return" bet.
• Simply stay away from this pricey offer.

ABOUT COMPANY:
Savani Financials Ltd. (SFL) was incorporated as "Savani Investments and Leasing Limited" on December 21, 1983, under the Companies Act, 1956 and was granted the Certificate of Incorporation by the Registrar of Companies, Maharashtra. The Company received the Certificate of Commencement of Business on April 27, 1984. Subsequently, the name of the Company was changed to "Savani Freight & Finance Limited" on May 18, 1987, vide a fresh certificate of incorporation issued by the Registrar of Companies, Maharashtra, Bombay.

Further, the name of our Company was changed to "Savani Financials Limited" on October 14, 1993,
vide a fresh certificate of incorporation issued by the Registrar of Companies, Maharashtra, Bombay.
Thereafter, it was registered under section 45-IA of The Reserve Bank of India Act, 1934 to commence/carry on the business of a Non-Banking Financial Institution. The Company is registered with the Reserve Bank of India ("RBI") as Non-Systemically Important Non-Deposit taking Non-Banking
Finance Companies (NSI-ND-NBFC) bearing registration number B-13.01071 vide the Certificate of
Registration dated October 27, 1998.

As on date, it does not have any employee on payroll since the business has not been operational. The company now propose to activate the business and engage the manpower necessary for the same.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 28000000 equity shares of Rs. 10 each at a fixed price of Rs. 17.50 per share to mobilize Rs. 49.00 cr. The RI opens for subscription on May 02, 2024, and will close on May 10, 2024. The company is offering RI in the ratio of 7 for 1 to its eligible stakeholders as of the record date of April 04, 2024. The company is asking for Rs. 14 per share on application for the number of shares applied, and the balance Rs. 3.50 will be by by one or more subsequent calls. Post allotment, RI will be listed on BSE. The company is spending Rs. 0.95 cr. for this RI process and from the net proceeds, it will utilize Rs. 35.00 cr. for augmenting its capital base, Rs. 0.92 cr. for repayment of unsecured loans, and Rs. 11.63 cr. for general corporate purposes.

This RI is self-managed by the company itself and Bigshare Services Pvt. Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 4.00 cr. will stand enhanced to Rs. 32.00 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 56.00 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 0.14 cr. / Rs. 0.02 cr. (FY20), Rs. 0.13 cr. / Rs. 0.05 cr. (FY21), Rs. 0.11 cr. / Rs. 0.02 cr. (FY22), Rs. 0.11 cr. / Rs. - (0.07) cr. (FY23). For the 9M of FY24 ended on December 31, 2023, it posted a net loss of Rs. - (1.12) cr. The company has given two pages of Balance Sheet data for FY23 and FY22 (refer page 106 - 107 of the offer document and has also given financial data with a mix of Rupees and Rs. Lakhs, this is leading to confusions. As of December 31, 2023, its current paid-up equity capital of Rs. 4.00 cr. has a negative other equity of Rs. - (3.02) cr.

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: 511577(FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 20.82 on March 26, 2024, and opened on an ex-right basis at Rs. 18.80 on April 08, 2024. Since then, it has marked a high/low of Rs. 18.80 / Rs. 18.80. The scrip last closed at Rs. 18.80 as of April 29, 2024. For the last 52 weeks' it has posted a high/low of Rs. 18.80 / Rs. 14.69. The trading is restricted on BSE for this counter on account of GSM: Stage 4. Eight fold post-RI equity base raises concern over its servicing.

The promoters' holding has been constant at 57.18% for the last three quarters ended with March 31, 2024. The counter is well managed above RI price to tempt investors.

Conclusion / Investment Strategy

The company that has yet to start employment and its financial services, it is coming out with a RI at a hefty price with no supportive financial performance. Eight-fold hike in post-RI equity raise concern over its servicing going forward. The counter currently has restricted trades on account of GSM: Stage 4. Despite all these, the company has been permitted to float RI. Just stay away from such pricey bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 1, 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 ).

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Savani Financials Ltd. Review by Dilip Davda

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

Savani Financial RI review (Avoid)

Conclusion / Investment Strategy

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