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Riddhi Corporate Services BSE SME IPO review (Avoid)

Review By Dilip Davda on Jun 9, 2017

Riddhi Corporate Services Ltd (RCSL) commenced its business activities by rendering services to Telecommunication service providers. RCSL provides services of Data Management, Collection and Handling of Customer Application Form (CAF), Audit of CAF, order entry of CAF, CAF Barcoding, Inward, Storage and Retrieval of Data, Temporary Indexing, Data Entry, Scanning, uploading and Sample image Audit at Spoke Level. In addition, the company is rendering services of Collection of Dues, Retention, Bill Delivery management Services along with over dues amount from subscriber by way Tele calling, Field visit, Address the Customer's Issue and retain the Customer, Escalation Management while collecting Overdue Amount. The company has also started rendering services to Banking sector. It does Address Verification (AV) and Credit Verification (CV) - Verification of Residence and Office of borrower and/or co borrowers or/and Guarantors (if any). Visit the applicant’s residence and office and office address and confirm the residential and employment status of the applicant. The visit to address provided should be unannounced and without prior intimation to the applicant. Assess the details as mentioned by applicant to Bank while applying for a loan, standard of living of the applicant. Assess the ease of approaching the address. Identify the name and the relationship of the person met at the applicant’s address. At present, RCSL is engaged in Business Process Outsourcing (BPO) to serve the needs of Telecom, Banking, Govt. Institutions, Insurance Companies rendering services to Telecommunication Service provider, Banking Sector, Non Banking Financing Institutions, E-Wallet Service provider etc.

To part finance acquisitions and other strategic initiatives, Capital Expenditure and general corpus fund needs, the company is coming out with a maiden IPO of 950000 equity share of Rs. 10 each at a fixed price of Rs. 130 per share to mobilize Rs. 12.35 crore. Issue opens for subscription on 12.06.17 and will close on 15.06.17. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Gretex Corporate Services Pvt Ltd and Purva Sharegistry (India) Pvt Ltd is the registrar to the issue. After raising Rs. 0.01 crore for equity at par, it issued bonus as consideration other than cash for Rs. 2.29 crore. Post issue its current paid up capital of Rs. 2.30 crore will stand enhanced to Rs. 3.25 crore.

On performance front, the company has posted turnover/net profits of Rs. 23.17 cr. / Rs. 0.90 cr. (FY14), Rs. 27.59 cr. / Rs. 2.73 cr. (FY15), Rs. 42.25 cr./ Rs. 3.12 cr. (FY16). For first nine months ended 31.12.16 it has earned net profit of Rs. 1.92 crore on a turnover of Rs. 45.02 crore. If we annualize the latest earnings and attribute to fully diluted equity post issue, then asking price is at a P/E of 16 plus and at a P/BV of 3.04. Its average RoNW for last three is 46.06. Its peers are trading in the range of 5.7 to 28.6 P/E.

On merchant banker’s front, this is the 4th mandate from its stable and from the last three issues only one issue gave positive return on the listing date.

Conclusion: Issue is aggressively priced, merchant banker has poor track record. Considering these, there is no harm giving this offer a miss.


Conclusion / Investment Strategy

Issue is aggressively priced, merchant banker has poor track record. Considering these, there is no harm giving this offer a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jun 9, 2017

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 information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

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.

Email: dilip_davda@rediffmail.com

Riddhi Corporate Services IPO FAQs

  1. 1. Why Riddhi Corporate Services IPO?

    The initial public offer (IPO) of Riddhi Corporate Services Ltd offers an early investment opportunity in Riddhi Corporate Services Ltd. A stock market investor can buy Riddhi Corporate Services IPO shares by applying in IPO before Riddhi Corporate Services Ltd shares get listed at the stock exchanges. An investor could invest in Riddhi Corporate Services IPO for short term listing gain or a long term.

  2. 2. How is Riddhi Corporate Services IPO?

    Read the Riddhi Corporate Services IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Riddhi Corporate Services IPO what should investors do?

    Riddhi Corporate Services IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Riddhi Corporate Services IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Riddhi Corporate Services IPO good?

    Our recommendation for Riddhi Corporate Services IPO is to avoid.

  5. 5. Is Riddhi Corporate Services IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Riddhi Corporate Services IPO.

  6. 6. When will Riddhi Corporate Services IPO allotment status?

    The Riddhi Corporate Services IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Riddhi Corporate Services IPO allotment status to check.

  7. 7. When will Riddhi Corporate Services IPO list?

    The Riddhi Corporate Services IPO will list on Thursday, June 22, 2017, at BSE SME.