Zerodha (Trading Account)
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• The company is engaged in providing financial services.
• It marked losses till 9M-FY23 and has a negative NAV of Rs. 1.03.
• As per exchange filing, it turned the corner for FY24, but still it is just a minuscule performance considering its paid-up equity level.
• It has carried forward losses as of March 31, 2024.
• There is no harm in skipping this risky bet.
ABOUT COMPANY:
Srestha Finvest Ltd. (SFL) is engaged in providing financial services as a one-stop-shop for investment, wealth management and financial advisory services. It claims to be in the said business for the past 38 years.
The Company's main business are Lending Money against Securities, Movable and immovable properties, Finance, Hire purchase and Leasing. The Company's Shares are listed in the Bombay Stock Exchange Limited and Metropolitan Stock Exchange ltd. The Company is a Non-Banking Financial Company registered with Reserve Bank of India as a Category 'B' NBFC Company. The company is not accepting Public Deposits. The Company has no Subsidiary Companies. As of March 31, 2023, it had just 3 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 240000000 equity shares of Rs. 2 each at par value to mobilize Rs. 48.00 cr. The company is offering RI in the ratio of 12 for 29 to its eligible stakeholders as of the record date of June 24, 2024. The issue opens for subscription on July 04, 2024, and will close on July 18, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and MSE (Metropolitan Stock Exchange).
The company is spending Rs. 1.20 cr. for this RI and from the net proceeds, it will utilize Rs. 40.00 cr. for working capital and Rs. 6.80 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. 116.00 cr. will stand enhanced to Rs. 164 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 164 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total income/net profit/ - (loss) of Rs. 2.30 cr. / Rs. - (0.04) cr. (FY22), and Rs. 2.75 cr. / Rs. - (4.97) cr. (FY23).
For the 9M of FY24 ended on December 2023, it posted a net loss of Rs. - (0.47) cr. on a total income of Rs. 3.42 cr. Its NAV stood at Rs. 1.03 as of December 31, 2023, indicating negative stance.
DIVIDEND POLICY:
The offer document is silent on its dividend policy. 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: 539217 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 2.12 on June 21, 2024, and opened on an ex-right basis at Rs. 2.16 on June 24, 2024. Since then, it has marked a high/low of Rs. 2.18 / Rs. 1.72. The scrip last closed at Rs. 1.96 as of July 02, 2024. For the last 52 weeks' it has posted a high/low of Rs. 2.18 / Rs. 0.98. The counter is currently under ESM: Stage 1.
As per exchange filing, the company has earned a net profit of Rs. 1.74 cr. on a total income of Rs. 12.76 cr. for FY24. But considering its current paid-up equity capital of Rs. 116 cr. that will rise to Rs. 164 cr. post-RI, its minuscule performance makes it a "High Risk/No Return" bet.
The promoters' holding has been at NIL for the last three quarters ended with March 31, 2024. The counter is quoting below par and makes this RI a risky bet.
Review By Dilip Davda on July 2, 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 Srestha Finvest 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 Srestha Finvest Rights Issue 2024 worth investing. The Srestha Finvest Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Srestha Finvest Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Srestha Finvest Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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