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Compuage Info RI review (May apply)

Compuage Infocom Limited Logo

•    CIL is engaged in IT-related services and distribution. 
•    It has been posting steady growth in its top and bottom lines for the reported periods.
•    Declining trends for promoter's holding raise concern. 
•    Counter is well managed to keep prices above the RI pricing. 
•    Cash surplus investors may consider parking funds for the long term. 

ABOUT COMPANY:
Compuage Infocom Ltd. (CIL) is into the distribution of IT hardware, software & security products distribution which is broadly categorized into IT consumers & enterprise segments. IT Consumers comprise of stock & sales model wherein CIL stock the products and facilitate the sale of the same, whereas the enterprise segment comprises of back-to-back sales model, where the entire sales are driven through various tie-ups such as organized retail chains, resellers, value-added resellers, brand stores, and system integrators.

CIL's product offerings include computers, components and peripherals, cloud computing, mobility products, enterprise solutions and physical safety and security solutions. It has tied up with a strong network of resellers to distribute product offerings across the length and breadth of the nation and beyond. 

The Company has established its presence across the country through sales offices, service centers, and warehouses. It has also tied up with global brands along with the web of resellers which enables the distribution of its products. CIL, through its WOS and branch office in Singapore, has a presence in the SAARC region.

CIL's operational activity pertaining to product offering includes procurement, warehousing, technical support, material movement, and evaluation-based credit facilities to the resellers based on their financial credibility. The Company also provides important value-added services, such as pre-sales and post-sales support for its enterprise and cloud-based products. Currently, CIL has a workforce of 676 employees.

ISSUE DETAILS:
To meet its funding needs for working capital (Rs. 31.79 cr.), and general corporate purpose (Rs. 9.00 cr.), CIL is offering a Rights issue (RI) in the ratio of 8 shares for every 25 shares held by the eligible stakeholders as of the record date of November 14, 2022. The company mulls raising Rs. 41.58 cr. post entire process for this RI is over for the issuance of 20792258 equity shares of Rs. 2 each at a fixed price of Rs. 20 per share. The issue opens for subscription on November 23, 2022, and will close on December 02, 2022. Post allotment, shares will be listed on BSE and NSE. CIL is spending Rs. 0.79 cr. for this RI process. 

The issue is solely lead-managed by Mark Corporate Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, CIL's current paid-up equity capital of Rs. 13.00 cr. will stand enhanced to Rs. 17.15 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 171.54 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, CIL has (on a consolidated basis) posted total revenue/net profit (loss) of Rs. 3747.18 cr. / Rs. 20.68 cr. (FY21), and Rs. 4223.95 cr. / Rs. 26.75 cr. (FY22). 

As per unaudited results filed with BSE, CIL has earned a net profit of Rs. 14.57 cr. on a revenue of Rs. 2186.20 cr. Thus it has been posting growth in its top and bottom lines for the reported periods. 

DIVIDEND POLICY:
The company paid a dividend of 10% 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: 532456 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 23.15 on November 11, 2022, and opened on an ex-right basis at Rs. 22.85 on November 14, 2022. Since then, it has marked a high/low of Rs. 25.25 / Rs. 22.25. It last closed at Rs. 22.60 on November 18, 2022. The scrip has posted the last 52 weeks' high/low of Rs. 45.65 / Rs. 19.68. This indicates that the counter is well-operated and kept above the RI pricing to lure investors.  Promoters' holding has declined from 58.33% in March 2022 quarter to 48.60% in September 2022 quarter. This raises a concern.


Conclusion / Investment Strategy

The counter is well managed for the last few months and is quoting above the RI pricing. Declining of promoters holding raises concern. Cash surplus investors may consider an investment with long-term perspectives.

Review By Dilip Davda on Nov 20, 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 Compuage Infocom Limited RI Views / Analysis / Recommendations ...

The Compuage Infocom Rights Issue 2022 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 Compuage Infocom Rights Issue 2022 worth investing. The Compuage Infocom Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Compuage Infocom Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Compuage Infocom Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


1 Comments

1. Satinder garg   I Like It. |Report Abuse|  Link|Nov 24, 2022 12:13:49 PMReply
How to apply in compuage. Info right issue, my demat is in kotak securities