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• This is the 3rd RI from the company since April 2023.
• The last RI was in the month of December 2023.
• The company has turned the corner for FY24, but has huge carried forward losses.
• It has a strong order book worth Rs. 955 cr. as of March 31, 2024.
• Well-informed/cash surplus investors may park moderate funds for the long term rewards.
PREFACE:
This company is making a hat trick of Rights issue wince April 2023, its first RI came at par in April 2023, 2nd RI at Rs. 13 in December 2023, and now this is 3rd RI at the same price as that of last RI. The only relief this time is it has posted some profits and has turned the corner. Both the previous two RIs were for mobilizing Rs. 49.90 cr. each time. The first RI was in the ratio of 2 for 53 and the second one in the ratio of 1 for 36. This RI details are given below.
ABOUT COMPANY:
SEPC Ltd. (SEPCL) erstwhile known as Shriram EPS Ltd., is engaged in Engineering Procurement and Construction Company (EPC Contractor) business with the experience of executing turnkey contracts in Engineering, Procurement, and Construction (EPC) and providing end-to-end solutions offering multi-disciplinary services and project management solutions.
It has a robust clientele comprising of various Central and State Government agencies such as Ahmedabad Urban Development Authority (AUDA), Kerala Water Authority, Gujarat Water Supply & Sewerage Board (GWSSB), Ahmedabad Municipal Corporation (AMC), Gujarat Water supply & Sewerage Board, Tamilnadu Water and Drainage Board, Karnataka Urban Infrastructure Development Finance Corporation, Bangalore Water Supply & Sewerage Board, Chennai Metro Water Supply & Sewerage Board, Durgapur Steel Plant, Bokaro Steel Plant, SAIL LISCO, Vizag Steel Plant.
SEPC Limited ("SEPC") is focused on providing turnkey solutions in the business areas, i.e. 1. Infrastructure: a. Water & Sewer and, b. Road, 2. Industrial EPC: a. Process Plants, b. Steel Plants, c. EPC under deep shaft Mining and, d. Power Plants. As of March 31, 2024, it has order book worth Rs. 955 cr. Its lion share of revenue comes from water and sever segment.
As of March 31, 2024, it had 229 employees on its payroll, and engages sub-contractor as and when needed.
ISSUE DETAILS:
The company is coming out with 3rd Rights Issue (RI) since April 2023. This RI is of 153846153 equity shares of Rs. 10 each at a fixed price of Rs.13 per share to mobilize Rs. 200 cr. The RI opens for subscription on July 05, 2024, land will close on July 19, 2024. The company is offering RI in the ratio of 6 for 55 to its eligible stakeholders as of the record date of June 25, 2024. The company is asking full amount on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 1.10 cr. for this RI process, and from the net proceeds, it will utilize Rs. 85.00 cr. for repayment/prepayment of certain borrowings, Rs. 111.90 cr. for working capital, and Rs. 2.00 cr. for general corporate purposes.
The issue is solely lead managed by Sumedha Fiscal Services Ltd., and Cameo Corporate Services Ltd. is the registrar to the issue.
Post-RI, its current paid-up equity capital of Rs. 1409.81 cr. will stand enhanced to Rs. 1563.66 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2032.76 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/ -(loss) of Rs. 340.59 cr. / Rs. - (263.70) cr. (FY22), Rs. 398.88 cr. / Rs. - (4.90) cr. (FY23), and Rs. 607.21 cr. / Rs.22.78 cr. (FY24). Thus the company has turned the corner for FY24. However, it has huge carried forward losses, that might take some time to wipe out.
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 NSE WEBSITE DATA: SCRIP CODE: DESTINY (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 20.47 on June 24, 2024, and opened on an ex-right basis at Rs. 19.50 on June 25, 2024. Since then, it has marked a high/low of Rs. 20.05 / Rs. 18.56. The scrip last closed at Rs. 19.57 as of July 03, 2024. For the last 52 weeks' it has posted a high/low of Rs. 26.73 / Rs. 8.89.
The promoters' holding has seen some decline to 26.96% as of March 31, 2024, against 27.75% for December 31, 2023, and 27.34% as of December 22, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on July 4, 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 SEPC Rights Issue June 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 SEPC Rights Issue June 2024 worth investing. The SEPC Rights Issue June 2024 Note sets the Rights Issue expectations in systematic way which tells you if SEPC Rights Issue June 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in SEPC Rights Issue June 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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