Aastamangalam Finance RI review - (Avoid)

•    The company is engaged in financial service business financing short/long-term loans.
•    It has posted super earnings for the reported periods.
•    Promoter’s holding is just around 27.60%. Counter is well operated by vested interests.
•    Based on its market trends, the issue is aggressively priced. 
•    There is no harm in skipping this thinly traded counter’s pricey bet.

ABOUT COMPANY:
Aastamangalam Finance Ltd. (AFL) was originally incorporated in the name and style of “Upaasana Finance Private Limited” as a Private Limited Company which was subsequently converted into a Public Limited Company under the Companies Act, 1956 with the name and style “Upaasana Finance Limited” pursuant to a Fresh Certificate of Incorporation granted by the. Registrar of Companies, Tamil Nadu at Chennai on June 15, 1988. There was name change of the company to “Upasana Finance Limited” w.e.f. January 9, 1995. Later there was name change of the company to “Aastamangalam Finance Limited” w.e.f. March 4, 2022.

The Company is a non-banking finance company registered with the RBI non-deposit accepting non-banking finance company (“NBFC”). The Company is currently carrying on the business of short term and long-term financing to both corporate and non-corporate entities. As of March 31, 2024, it had just 3 employees on its payroll including 2 top management employees.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 7127800 equity shares of Rs.10 each at a fixed price of Rs. 42.50 per share to mobilize Rs. 30.29 cr. The RI has already opened for subscription on December 27, 2024, and will close on January 03, 2025. The full amount it to be paid on application for number of shares applied.  The company is offering RI in the ratio of 8 for 10 to its eligible stakeholders as of the record date of December 13, 2024. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 29.25 cr. for augmenting its capital base, and Rs. 0.54 cr. for general corporate purposes. 

The RI is self-managed by the company itself, and Integrated Registry Management Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up capital of Rs. 8.91 cr. will stand enhanced to Rs. 16.04 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 68.16 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total income/net profit of Rs. 3.36 cr. / Rs. 1.45 cr. (FY23), Rs. 7.03 cr. / Rs 3.60 cr. (FY24), For H1 of FY25 ended on September 30, 2024, it posted net profit of Rs. 4.18 cr. on a total income of Rs. 7.05 cr. Thus the company has been posting super earnings on its minuscule financial performance. 

DIVIDEND POLICY:
The company has not declared any dividends for the last three fiscals. 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: 511764 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 55.51 on December 12, 2024, and opened on an ex-right basis at Rs. 50.00 on December 13, 2024. Since then, it has marked a high/low of Rs. 52.94 / Rs. 45.60. The scrip last closed at Rs. 47.94 as of December 27 2024. For the last 52 weeks’ it has posted a high/low of Rs. 56.36 / Rs. 32.26. The counter is currently under ESM: Stage 2. 

The promoters’ holding has been constant at 27.60% for the last three quarters ended with Sept. 30, 2024. The counter is well managed above the RI price by vested interests to temp investors.