Shangar Decor RI review (Avoid)

• The company is engaged in providing décor related services to its clients.
• The company posted slow and steady growth in its top and bottom lines for the reported periods.
• The financial performance is not in line with the asking price.
• Nearly eight-fold rise in its post-RI equity base may pose its servicing issue.
• There is no harm I skipping this "High Risk/Low Return" pricey bet.

ABOUT COMPANY:
Shangar Decor Ltd. (SDL) is engaged in the business of providing its clients decor related services that range from Pre-wedding events, Theme wedding, corporate events, religious events, Property decor, Lights decor, and exhibitions and Catering. It provides the best-in-class service to clients along with the utmost quality and safety precautions.

The company is a premier company specializing in a wide range of event decor and management services. Renowned for its creativity and attention to detail, the company has carved out a niche in the Indian event industry by offering comprehensive solutions that cater to weddings, corporate events, government functions, and more. With a deep understanding of cultural nuances and a commitment to excellence, SDL transforms ordinary spaces into extraordinary experiences, leaving a lasting impression on clients and their guests. As of the date of this offer document, it had just 8 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 85682800 equity shares of Rs. 5 each at a fixed price of Rs. 5.76 per share to mobilize Rs. 49.35 cr. The RI opens for subscription on November 08, 2024, and will close on December 06, 2024. The company is offering RI in the ratio of 7 for 1 to its eligible stakeholders as of the record date of October 28, 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. 37.81 cr. for working capital, and Rs. 11.29 cr. for general corporate purposes.

The issue is self-managed by the company itself, and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 6.12 cr. will stand enhanced to Rs. 48.96 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 56.40 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income/net profit of Rs. 9.67 cr. / Rs. 0.20 cr. (FY23), Rs. 13.00 cr. / Rs. 0.75 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 0.88 cr. on a total income of Rs. 5.29 cr. The company marked steady but slower growth in its top and bottom lines for the reported periods.

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: 540259 (FV Rs. 5).
The scrip last closed on cum-right basis at Rs. 8.55 on October 25, 2024, and opened on an ex-right basis at Rs. 6.40 on October 28, 2024. Since then, it has marked high/low of Rs. 8.25/ Rs. 6.40. The scrip last closed at Rs. 8.25 as of November 07, 2024. For the last 52 weeks' it has posted a high/low of Rs. 8.35 / Rs. 2.64. The counter is currently under ASM LT: stage 1.

The promoters' holding has been constant at 22.96% for the last three quarters ended September 30, 2024. The counter is well managed by vested interests above RI pricing. Based on its market price movements, the RI appears lucratively priced.

Conclusion / Investment Strategy

The company is operating in a highly competitive and fragmented segment of décor related services for its clients. It posted slow but steady progress in its financial performance for the reported periods, but a minuscule bottom line may pose capital servicing issue as its equity will be eight fold post-RI. The issue appears aggressively priced based on its earnings. There is no harm in skipping this “High Risk/Low Return” pricey bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on November 7, 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 Shangar Decor 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 Shangar Decor Rights Issue 2024 worth investing. The Shangar Decor Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Shangar Decor Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Shangar Decor Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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Shangar Decor RI review (Avoid)

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