Shraddha Prime RI review (Avoid)

• SPPL is in real estate development, a highly competitive and fragmented segment.
• It has posted listless financial performance so far.
• Promoter's holding of 75% is the only plus point.
• There is no harm in skipping this "High Risk/Low Return" RI offer.

ABOUT COMPANY:
Shraddha Prime Projects Ltd. (SPPL) - (erstwhile known as Towa Sokki Ltd.) - was originally incorporated as a Public Limited Company on March 10, 1993, under the provisions of the erstwhile Companies Act, 1956 in the name and style as "Towa Sokki Limited". It obtained the Certificate of Commencement of Business on March 19, 1993, by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli.

Subsequently, the equity shares of the company were listed on BSE Limited on June 3, 1996. Prior to the year 2021, it was engaged in the business of electrical equipments. In 2021, the company was taken over by the new management (Shraddha Group).

Now under the new name and style, it is an integrated construction and real estate development company, primarily focused on the construction and development of residential and commercial projects, in and around Mumbai, Maharashtra. The brand 'Shraddha Group' have established a successful track record in the real estate industry in Mumbai and Pune by developing real estate projects through its focus on innovative architecture, strong project execution and quality construction.

As of the date of this Letter of Offer, it had 8 ongoing and planned projects. The company expects to launch most of these projects in the market over the next three to five years. Its ongoing and planned projects are in locations that generally provide greater cash flow visibility.

As of the date of this Letter of Offer, the company had four permanent employees including key managerial persons. Its manpower requirement is fulfilled under contractual arrangements with third parties on a need basis. It is silent on the exact data of human resources.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 16625020 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 49.88 cr. The issue has already opened for subscription on July 10, 2023, and will close on July 24, 2023. The company is offering RI in the ratio of 365 for 100 shares held as of the record date of July 02, 2023, by eligible stakeholders. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE. SPPL is spending Rs. 0.50 cr. for this RI process and from the net proceeds it will utilize Rs. 38 cr. for repayment of secured/unsecured loans, and Rs. 11.38 cr. for general corporate purposes.

The issue is self-managed by the company and RCMC Share Registry Pvt. Ltd. is the registrar of the issue.

Post RI, SPPL's current paid-up equity capital of Rs. 4.55 cr. will stand enhanced to Rs.21.18 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 63.54 cr. The surge in the equity capital of over 4 times may post servicing issues.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a turnover/net profit - (loss) of Rs. 0.10 cr. / Rs. - (0.25) cr. (FY21), Rs. 0.13 cr. / Rs. - (0.31) cr. (FY22), and Rs. 8.62 cr. / Rs. 0.62 cr. (FY23). Thus its financial performance so far has been listless and not matching the asking price.

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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: 531771 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 30.04 on June 28, 2023, and opened on an ex-right basis at Rs. 31.54 on July 03, 2023. Since then, it has marked a high/low of Rs. 42.66/ Rs. 31.54. The scrip last closed at Rs. 36.67 as of July 12, 2023. For the last 52 weeks, it has posted a high/low of Rs. 42.66 / Rs. 15.25. Thus the counter is well operated by vested interests above the RI price to lure investors.

The promoters' holding has been constant at 75% for the last three quarters ended on March 31, 2023. This counter is currently under ESM - Stage 1.

Conclusion / Investment Strategy

The company is operating in a highly competitive and fragmented segment. Its financial performance so far has been listless and not matching the asking price. There is no harm in skipping this “High Risk/Low Return” RI offer.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on July 13, 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 ).

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Shraddha Prime Projects Limited Review by Dilip Davda

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

Shraddha Prime RI review (Avoid)

Conclusion / Investment Strategy

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