Choice Intl (May apply)

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•    CIL is a holding company of many financial services subsidiaries. 
•    The company has fared well in the reported financial data.
•    It last paid a dividend of 10% for FY19 and then skipped till now. 
•    Based on its price movement, RI is lucratively priced. 
•    Investment may be considered with a long term perspective. 

Choice International Ltd. (CIL) is a holding company and operate our business through a web of our Subsidiaries, Wholly Owned Subsidiaries and Step Down Subsidiaries. It offers financial services across all platforms catering to retail and institutional clients, corporates and state and central governments. The services are bifurcated into Retail services (B2C) and Institutional Services (B2B & B2G). The B2C services include Equity & commodity broking, Wealth Services and NBFC Services. The B2B services comprise Management consulting, Investment Banking and government services like Infrastructure Consulting and Government Advisory.

To part finance its needs for funds for investing in material subsidiary (Rs. 50.25 cr.), CIL is coming out with a rights issue (RI) of 9951200 equity shares of Rs. 10 each at a fixed price of Rs. 51 per share to mobilize Rs. 50.75 cr. The company is offering 1 share against every 4 shares held by the shareholders as of the record date i.e. January 20, 2022. The RI opens for subscription on February 01, 2022, and will close on February 15, 2022. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process. 

The issue is solely lead managed by Saffron Capital Advisors Pvt. Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. 

Post RI, CIL's current paid-up equity capital of Rs. 39.81 cr. will stand enhanced to Rs. 49.76 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 253.76 cr. 

On the financial performance front, for the last two fiscals, CIL has (on a consolidated basis) posted revenue/net profits of Rs. 134.22 cr. / Rs. 12.43 cr. (FY20) and Rs. 175.82 cr. / Rs. 16.71 cr. (FY21). For H1 of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 24.65 cr. on a revenue of Rs. 124.85 cr. Thus it has posted growth for all these years in its top and bottom lines. As of December 31, 2021, the promoter's holding was 64.31%.

The scrip closed on cum-rights basis at Rs. 274.15 as of January 18, 2022, and opened on an ex-rights basis at Rs. 224.90 on January 19, 2022. Since then it has posted a high/low of Rs. 231.70 /Rs. 180.00. For the last 52 weeks, it has marked a high/low of Rs. 249.43/ Rs. 87.84. It last closed at Rs. 204.00 as of January 28, 2022, and based on this closing, its market cap amounts to Rs. 1015.02 cr. 

The company paid a dividend of 10% from FY13 to FY19 and thereafter, it skipped. It will follow a prudent dividend policy based on its financial performance and future prospects. 

Conclusion / Investment Strategy

The company has posted growth in its financial performance for the reported periods. However, it skipped dividends for these financial years. Its price movement makes this RI lucratively priced bet. One may consider an investment with a long term perspective.

Review By Dilip Davda on Jan 28, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

More Choice International Limited RI Views / Analysis / Recommendations ...

The Choice International Rights Issue Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Choice International Rights Issue worth investing. The Choice International Rights Issue Note sets the Rights Issue expectations in systematic way which tells you if Choice International Rights Issue good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Choice International Rights Issue by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.