Aplab Ltd Right Issue review - (May apply)

•    The company is engaged in electronic devices manufacturing.
•    It has posted poor results for recent fiscals.
•    Though the offer is at par, its negative NAV raises concern.
•    Counter is purely operator driven with jacked up prices despite the thin volume.

ABOUT COMPANY:
Aplab Ltd. was originally incorporated on September 30, 1964, in Mumbai under the Companies Act 1956, in the name of 'Applied Electronics Limited' with the Registrar of Companies ('RoC'), Mumbai. On October 06, 1994, the name of our Company was changed to the present name 'Aplab Limited', and a fresh certificate of incorporation was obtained. Currently, the Company is engaged in the business of manufacturing Test and Measurement Equipment, Power Conversion and UPS Systems and Self-Service Terminals for the Banking Sector.

Since its inception, Aplab has been serving the Global Market with a wide range of Electronic Products meeting the International standards for safety and reliability such as UL, VDE etc. APLAB manufactures Test and Measurement Equipment, Power Conversion and UPS Systems and Self-Service Terminals for the Banking Sector. Its Products are available with QA Certification from UL, ATEX, OEML etc. on the option of the client. APLAB is certified for quality with ISO 9001:2015 registration.

ISSUE DETAILS:
To part finance its plans for repayment of Bank of Baroda loan (Rs. 2.20 cr.), General corpus fund needs (Rs. 2.45 cr.), Aplab is coming out with a rights issue in the ratio of 1 for 1 at par (Rs. 10 each) to mobilize Rs. 5.00 cr.  The record date for the said purpose was June 08, 2021. The issue opens for subscription on June 17, 2021, and will close on July 01, 2021. Post allotment, shares will be listed on BSE. Adroit Corporate Services Pvt. Ltd. is the registrar to the issue.

Post Rights issue, Aplab's current paid-up equity capital of Rs. 5 cr. will stand enhanced to Rs. 10 cr. Promoters holding as of the filing of the Letter of Offer was 49.06%. The company will be spending Rs. 0.35 cr. for the rights issue process.

FINANCIAL PERFORMANCE:
On the financial performance front, the company has reported turnover/net profit of Rs. 53.53 cr. / Rs. 5.41 cr. (FY19) and Rs. 51.88 cr. / Rs. 0.21 cr. (FY20). For the nine months of FY21 ended on December 31, 2020, it posted a loss of Rs.1.50 cr. on a turnover of Rs. 32.80 cr. According to management, the performance got affected due to the pandemic and uncertainty prevails as the second wave of the pandemic has hit hard. Due to certain provisions the company has negative equity, i.e. as of December 31, 2020, its NAV stands as Rs. - (55.69).

The company has tax liability litigations amounting to Rs. 10.41 cr., which raises concern.

SCRIP MOVEMENT ON BSE:
The scrip turned ex-right at Rs. 19.50 on June 07, 2021, and was quoted at Rs. 25.50 on cum right basis on June 04, 2021. It has posted 52 weeks high/low of Rs. 20.00 / Rs. 3.10. It appears that with market operations, its prices were jacked up with thin volumes. The company is coming out with the issue at par value due to huge negativity in NAV.


With the rights issue pricing, the company is looking for a market cap of Rs. 10 cr. versus a current market cap of Rs. 16.75 cr. based on its last traded price of Rs. 16.75 per share.