Destiny Logi NSE SME RI review (Avoid)

Destiny Logistic & Infra Limited Logo

•    DLIL was primarily in the logistics-related services business.
•    It has now added infra projects and trading activities for building materials.
•    The company has posted inconsistent financial performance so far. 
•    After a maiden IPO at Rs. 20 per share, it is coming with RI at Rs. 10 per share. 
•    There is no harm in skipping this at par RI as it's a high-risk/low-return bet. 

This company came with its maiden IPO worth Rs. 5.39 cr. at a price of Rs. 20 per share in September/October 2021. Since listing, this counter has been languishing. Now this company is coming with its Rights Issue to mobilize Rs. 7.69 cr. with at par issue. Thus the maiden IPO came a double the price and now it is coming with a par value issue. 

Destiny Logistics & Infra Ltd. (DLIL) (erstwhile known as Destiny Logistics Ltd.) is in the business of Logistics involving land-based transportation through third-party service providers. Presently its services are mainly in the domestic market, more specifically in the state of West Bengal. The company procures third-party vehicles both contractually and in the spot market. It offers customers, transport management services and arranges for third party-operator to handle freight-related services. 

DLIL provides a complete range of services like packaging, loading, transportation, unloading and unpacking of items to facilitate its customers with end-to-end solutions. This asset-light business model allows for the scalability of services as well as the flexibility to develop and offer customized logistic solutions across diverse sectors. It provides end-to-end safe mobility and delivery of items. The company is also currently engaged in the infrastructure project- Construction of Storm Water Drainage Scheme for the Municipal Town of Tarakeswar, Hooghly, West Bengal under the Tarakeswar Development Authority, West Bengal and the work is under progress. Further, it is doing trading activities, mainly in building materials like cement, etc. The offer document is silent on the number of employees it has employed. 

The company is coming out with a rights issue of 7694000 equity shares of Rs. 10 each at par value to mobilize Rs. 7.69 cr. It is offering RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of January 27, 2023. The RI opens for subscription on February 08, 2023, and will close on February 17, 2023. The full amount is to be paid on the application for the number of shares applied. It has indicated a market lot of 6000 shares. The company is spending Rs. 0.40 cr. for this RI and from the net proceeds, it will utilize Rs. 6.29 cr. for working capital and Rs. 1.00 cr. for general corporate purposes.

Post-RI, DLIL's current paid-up equity capital of Rs. 7.69 cr. will stand enhanced to Rs. 15.39 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 15.39 cr. 

Finshore Management Services Ltd. is the sole lead manager to this RI and Cameo Corporate Services Ltd. is the registrar of the issue. Nikunj Stock Brokers Ltd. is the market maker for the company. 

On the financial performance front, the company has posted a turnover/net profit of Rs. 6.75 cr. / Rs. 0.05 cr. (FY20), Rs. 10.06 cr. / Rs. 0.30 cr. (FY21) and Rs. 34.75 cr. / Rs. 1.30 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 0.27 cr. on a turnover of Rs. 7.14 cr. The sudden boost in the top line for FY22 is attributed to infra-related/trading activities undertaken during this fiscal. It has posted inconsistency in its financial performance for the last 18 months' activities. 

The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 21.40 on January 25, 2023, and opened on an ex-right basis at Rs. 14.95 on January 27, 2023. Since then, it has marked a high/low of Rs. 16.25 / Rs. 13.70. The scrip last closed at Rs. 14.95 as of February 03, 2023. For the last 52 weeks, it has posted a high/low of Rs. 24.60 / Rs. 9.65. The promoters' holding has been constant at 64.80% for the last three quarters ended on Sept. 30, 2022. The counter is well managed above the par value to lure investors.

Conclusion / Investment Strategy

Though this RI is at par, its financial performance is listless. The company has failed to live up to the confidence of investors in its maiden IPO. There is no harm in skipping this at-par bet as it’s a high-risk/low-return bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Feb 3, 2023

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. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda

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 Destiny Logistic & Infra Limited RI Views / Analysis / Recommendations ...

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


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