• The company is in the trading business of various metal and alloy products.
• Its financial performance not matching with the asking price of RI.
• Triple equity post-RI may face servicing issues.
• Current market price is much lower than the asking price for RI.
• Simply avoid such exorbitantly priced offer.
PREFACE:
Aho Ashcharyam, the current market price of the share is Rs. 11.93 as of April 19, 2024 and the asking price for RI share is Rs. 18 per share. The counter is currently under ASM ST: Stage 1. It marked minuscule earnings for the reported periods, which does not match the asking price. The maiden IPO was at the same price of Rs. 18 per share to mobilize Rs.6.48 cr. in July 2021. The IPO was subscribed 1.46 times with structured mode. With this rights issue, its paid-up equity will triple and may pose servicing issue. Maiden IPO was mandated by Inventure Merchant Banker Services Pvt. Ltd., but this RI is self-managed. This is the simple case of ignoring such pricy offer. The minimum application lot is for 8000 shares.
ABOUT COMPANY:
AA Plus Tradelink Ltd. (APTL) is currently engaged in the business of trading of products made of iron & steel, aluminium, graphite and other alloy products. It is a multi-product trading company with a diverse product portfolio.
The Company offer various products to cater to the specific needs of clients. Its diverse product portfolio includes products such as Aluminium Bars, Rods & Profiles, Aluminium Powder, Aluminium Scrap, Ammonium Molybdenum, G I Pipe, Graphite Flakes and Circle, Graphite Powder, Graphite Rods, Blocks and Plates, Graphite Scrap, Graphite Square and Round, M S Pipe, M S Sheet amongst others. It services customers with products ranging to all sizes, grades, and standards under one roof that helps in reducing risks arising from service and client concentration. As of March 31, 2023, it had employees on its payroll. However, the offer document is missing the latest tally of employees on roll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 16329600 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share to mobilize Rs. 29.39 cr. The RI opens for subscription on April 22, 2024, and will close on May 06, 2024. The company is offering RI in the ratio of 2 for 1 to its eligible stakeholders as of the record date of April 05, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE SME. The company is spending Rs. 0.75 cr. for this RI, and from the net proceeds, it will utilize Rs. 23.39 cr. for working capital, Rs. 5.25 cr. for general corporate purposes. The application to be made in a minimum lot of 8000 shares and in multiples thereon, thereafter.
This RI is self-managed by the company and Purva Sharegistty (India) Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up capital of Rs. 8.17 cr. will stand enhanced to Rs. 24.49 cr. Based on RI pricing, the company is looking for a market cap of Rs. 44.09 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total income of Rs. 11.54 cr. / Rs. 0.19 cr. (FY22), Rs. 17.17 cr. / Rs. 0.21 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 0.27 cr. on a total income of Rs. 9.47 cr.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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: 543319 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 12.42 on April 04, 2024, and opened on an ex-right basis at Rs. 12.42 on April 05, 2024. Since then, it has marked a high/low of Rs. 13.82 / Rs. 10.90. The scrip last closed at Rs. 11.93 as of April 19, 2024. For the last 52 weeks' it has posted a high/low of Rs. 20.44 / Rs. 4.70. The counter is trading much below the RI pricing. Why one should burn their savings is such pricey offer?
The promoters' holding has declined from 32.78% as of March 31, 2023 to 21.32% as of March 31, 2024. The counter is trading at a hefty discount to offer price; thus the RI is exorbitantly priced. The counter is currently under ASM ST: Stage 1.
Review By Dilip Davda on April 20, 2024
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
