Credent Global RI review - (Avoid)

•    CGFL is an NBFC providing financial services and advisory on investments.
•    Its financial performance is on a minuscule level for the last two fiscals. 
•    The sudden boost in its top and bottom lines for FY23 raises eyebrows. 
•    Investors may skip this exorbitantly priced RI offer. 

ABOUT COMPANY:
Credent Global Finance Ltd. (CGFL) - erstwhile known as Oracle Credit Ltd. - that was originally promoted under the name and style of Overnite Finance Pvt. Ltd. has changed its name frequently in the period so far. It changed its name to Overnite Finance Ltd. in July 1994, then to OFL Finanz Ltd. in November 1994, to Oracle Credit Ltd. in August 1995, and then to its current name in April 2023. It got listed on BSE in January 2016.  

The company is a Non-Banking Financial Company (NBFC) registered with RBI as an NBFC- Non-Deposit taking - Non-Systematically Important under section 45 IA of the Reserve Bank of India Act, 1934. It is currently providing a range of financing solutions including credit lending, investment banking services, real estate advisory and asset management. It offers financial products and services to corporates, institutions, and individuals across India and the UK and also supports investors with a deep domain understanding of 150+ years of knowledge and solid financial strategy and it intends to continue to empower innovative and sustainable businesses to create long-term strong returns over verticals.

CGFL is a holding company and provides financial services through its three wholly owned subsidiaries i.e. Credent Investment Pvt. Ltd., Credent Property Advisory Pvt. Ltd. and Credent AMC Pvt. Ltd. The offer document is silent on its infrastructure as well as employees' strength data. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 3468750 equity shares of Rs. 10 each at a fixed price of Rs. 140 per share to mobilize Rs. 48.56 cr. The issue opens for subscription on July 25, 2023, and will close on August 08, 2023. The company is offering RI in the ratio of 1 share for every 2 shares held by the eligible stakeholders as of the record date of July 17, 2023. The full amount is to be paid with the application for the number of shares applied. Post allotment, shares will be listed on BSE. 

The issue is self-managed by the company and Beetal Financial & Computer Services Pvt. Ltd. is the registrar of the issue.

Post-RI, CGFL's current paid-up equity capital of Rs. 6.94 cr. (6937500 shares) will stand enhanced to Rs. 10.41 cr. (10406250 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 145.69 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, CGFL has (on a consolidated basis) posted a total income/net profit of Rs. 1.90 cr. / Rs. 1.07 cr. (FY22), and Rs. 19.57 cr. / Rs. 6.74 cr. (FY23). The sudden boost in top and bottom lines for FY23 raises eyebrows. The margins posted for FY23 are the major concern since it is operating in a highly competitive segment. 

DIVIDEND POLICY:
The company has declared a 5% interim dividend for FY23. 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: 539598 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 153.80 on July 15, 2023, and opened on an ex-right basis at Rs. 153.80 on July 17, 2023. Since then, it has marked a high/low of Rs. 153.80 / Rs. 139. The scrip last closed at Rs. 140.20 as of July 21, 2023. For the last 52 weeks, it has posted a high/low of Rs. 330.77 / Rs. 49.86. Thanks to market operations by the vested interest that is managing the counter just above or around the RI price. 

The promoters' holding has been constant at 46.12% for the last three quarters ended on June 30, 2023. The counter is well-managed above the RI price to lure investors. 

The counter is currently under ESM Stage 1.