Avantel Ltd. RI review - (Apply)

•    The company is engaged in the business of satellite communication systems development and related services.
•    The company marked steady growth in its top and bottom lines for the reported periods.
•    It is operating in the aerospace and defense segment.
•    The offer is at a discount of around 66% comparing its current market price.
•    Investors may park funds in this reasonably priced bet for medium to long term.

PREFACE:
The RI of this company is opening on May 15, 2025, and its offer document is dated May 05, 2025, but its offer documents were made available on BSE Web only in the noon of May 14, 2025. Practice of delayed submission of required info continues unabatedly.

ABOUT COMPANY:
Avantel Ltd. (AL) is engaged in the business of development of Satellite Communication Systems, Software Defined Radios, Radar Systems and Electronic sub-systems for Aerospace & Defence. The company is well known for its capabilities in Design, Development, Manufacturing, Installation & Commissioning, System Integration, Testing & Evaluation of Defence Electronics, Satellite Communication Systems, Telecom Systems and Development of Embedded, Network Management & Application Software. AL’s core competencies include RF System Design, Wireless & Satellite Communication Systems, Embedded Systems, Digital Signal Processing, Network Management & Software Development and Engineering Services. The offer document is silent on its employees’ strength.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 20226100 equity shares of Rs. 2 each at a fixed price of Rs. 40 per share to mobilize Rs. 80.90 cr. The RI opens for subscription on May 15, 2025, and will close on May 28, 2025. The company is asking for full money on application for the number of shares applied. The company is offering RI in the ratio of 10 for 121 to its eligible stakeholders as of the record date of May 07, 2025. Post allotment, shares will be listed on BSE and NSE. AL is spending Rs. 0.95 cr. for this RI process, and from the net proceeds, it will utilize Rs. 53.85 cr. for capex on new manufacturing facility design and related matters, Rs. 6.16 cr. for capex on GSaaS infrastructure, and Rs. 19.94 cr. for general corporate purposes. 

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

Post RI, company’s current paid-up equity capital of Rs. 48.95 cr. will stand enhanced to Rs. 52.99 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 1059.85 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 224.37 cr. / Rs. 52.56 cr. (FY24), Rs. 249.13 cr. / Rs. 56.45 cr. (FY25). Thus, it posted steady growth in its top and bottom lines for the reported periods. 

DIVIDEND POLICY:
The company has paid a dividend of 10% for FY23 and FY24. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. The offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 532406 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 114.65 on May 06, 2025, and opened on an ex-right basis at Rs. 108.95 on May 07, 2025. Since then, it has marked a high/low of Rs. 118.30 / Rs. 101.35. The scrip last closed at Rs. 117.25 as of May 14, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 212.61 / Rs. 90.30. 

The promoters’ holding has declined from 40.06% as of September 30, 2024, to 38.57% as of March 31, 2025. The counter is currently trading well above the RI price and is offered at a reasonable rate.