Destiny Logi NSE SME RI review - (Avoid)

•    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. 

PREFACE:
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. 

ABOUT COMPANY:
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. 

ISSUE DETAILS:
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. 

FINANCIAL PERFORMANCE:
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. 

DIVIDEND POLICY:
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. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: DESTINY (FV Rs. 10).
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.