7NR Retail RI review - (Avoid)

•    7NR is primarily in the trading business that includes apparel, furniture, and electronic devices.
•    Though it posted growth in its top line, it witnessed pressure on margins.
•    Based on its financial performance, RI is greedily priced. 
•    There is no harm in skipping this pricy bet. 

ABOUT COMPANY:
7NR Retail Ltd. (7NR) is engaged in the business of trading apparel in the wholesale and retail segments. Its maiden IPO came in July 2017 at a price of Rs. 27 per share of Rs. 10 each. 

The Company remained focused on providing distinctive, high-quality, and trusted products to consumers the at right price. It is Entrepreneur-driven and well-managed organization focused on meeting consumer requirements for meeting their fashion and lifestyle requirements by offering products and services of the finest quality.

Further 7NR has started 2 new units at Vatva and Motera in the Segment of Retail Stores of Furniture, Garments, and other products wholesaling Electronic Devices.

ISSUE DETAILS:
To part finance its need for working capital (Rs. 11.69 cr.), general corporate purposes (Rs. 3.90 cr.), 7NR is offerings 116695000 equity shares of Re. 1 each at a fixed price of Rs. 1.40 per share to mobilize Rs. 16.34 cr. The company is offering the right issue (RI) in the ratio of 1 for 1 to the stakeholders whose names appeared in the company's books as of the record date of August 23, 2022. The issue opens for subscription on September 06, 2022, and will close on September 20, 2022. The full amount is to be paid on application. Post allotment, shares will be listed on BSE. 7NR is spending Rs. 0.75 cr. for this RI process. 

The issue is self-managed by the company and Cameo Corporate Services Ltd. is the registrar to the issue. From listing in July 2017 till now, it issued bonus shares in the ratio of 1 for 2 in September 2018 and opted for a stock split in the ratio of 10 for 1 in March 2022. Thus it marked many gimmicks to maintain counter. 

Post RI, 7NR's current paid-up equity capital of Rs. 11.67 cr. will stand enhanced to Rs. 23.34 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 32.68 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, 7NR reported a turnover/net profit - (loss) of Rs. 2.98 cr. / Rs. - (0.53) cr. (FY21), Rs. 24.29 cr. / Rs. 0.77 cr. 

As per the unaudited results filed with BSE, the company has earned a net profit of Rs. 0.12 cr. on a turnover of Rs. 19.35 cr. for the three months of FY23 ended on June 30, 2022. Thus, it is facing margin pressure and may make it difficult to service the double equity post-RI. Thus on the financial performance aspect, it has marked poor records.

DIVIDEND POLICY:
The company paid a dividend of 0.5% in August 2018 and September 19. It will adopt a prudent dividend policy post listing of RI, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 540615:
The scrip last closed on cum-right basis at Rs. 1.79 on August 22, 2022, and opened on an ex-right basis at Rs. 1.74 on August 23, 2022. Since then it has marked a high/low of Rs. 2.00 / Rs. 1.50. The scrip last closed at Rs. 1.68 as of September 02, 2022. Based on this quote, its post-RI market cap stands at Rs. 39.21 cr. The scrip has posted the last 52 weeks high/low of Rs. 2.61 / Rs. 0.67 (post adjustment of Ex-RI impact). Promoter holding has declined from 30.81% as of March 31, 2022, to 27.23% for June 2022 quarter end. The counter is maintained above the RI price despite the lower promoter's holding indicates some wasted interest game.