• The company is engaged in comprehensive educational service providing.
• It posted inconsistency in its minuscule financial performances for the reported periods.
• It is operating in a highly competitive and fragmented segment.
• Though the RI is at par value, it is a "High Risk/Low Return" bet.
• There is no harm in skipping this at par issue.
ABOUT COMPANY:
DSJ Keep Learning Ltd. (DKLL) - erstwhile known as Dalal Street Communications Ltd., renamed as DSJ Communications Ltd. and now it's known as DKLL. The company is engaged in the business of providing comprehensive educational service. Its services and Products portfolio includes services offered such as campus enablement, online programs for continuing education, quality assurance mentoring for institutes and universities, publication of research etc.
It has recently launched flagship technology product, keeplearningOS (kOS). kOS is a IT based application for educational institutes to automate the entire education system from admissions to results, time-table, faculty mapping, announcements, project work, assignment submissions, etc. The test run of the kOS was successfully done and from financial year 2022-23, the Company started booking revenue from kOS. kOS now meets the needs of 200+ administrators'/faculty members and 2300+ students.
The company also diversified the functionality of its platform to meet the needs of institutes across academic administration, student information management, finance, and human resources. As a testament to its product's ability, kOS is also being used by it to manage continuing education operations. The offer document is silent on its human resources data.
ISSUE DETAILS:
The company is coming out with its Rights Issue of 68124036 equity share of Re. 1 each at a par value to mobilize Rs. 6.81 cr. The RI opens for the subscription on May 29, 2024, and will close on June 06, 2024. The company is offering RI in the ratio of 7 for 9 to its eligible stakeholders as of the record date of May 14, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.60 cr. for this RI process, and from the net proceeds, it will utilize Rs. 1.90 cr. for repayment/pre-payment of unsecured loan vailed from its promoter group entity, Rs. 2.10 cr. for software development expense, Rs. 1.90 cr. for programe delivery and management services, and Rs. 0.32 cr. for general corporate purposes.
The RI is self-managed by the company itself, and Link Intime India Pvt. Ltd. is the registrar to the issue.
Post-RI, its current paid-up equity capital of Rs. 8.76 cr. will stand enhanced to Rs. 15.57 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 15.57 cr. The company may face capital servicing issue considering its minuscule earnings.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last xxx fiscals, the company has posted a total income/net profit of Rs. 4.95 cr. / Rs. 1.27 cr. (FY22), Rs. 5.75 cr. / Rs. 0.06 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 0.24 cr. on a total income of Rs. 4.47 cr. Besides posting inconsistency in its performances, it marked the sudden boost in its bottom line raise eyebrows and concern over its sustainability going forward.
DIVIDEND POLICY:
The offer document is silent on its dividend policy. 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: 526677 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 6.25 on May 13, 2024, and opened on an ex-right basis at Rs. 4.15 on May 14, 2024. Since then, it has marked a high/low of Rs. 4.56 / Rs. 2.97. The scrip last closed at Rs. 2.97 as of May 28, 2024. For the last 52 weeks' it has posted a high/low of Rs. 4.61 / Rs. 1.72. The counter is currently under GSM: Stage 0 / ESM: Stage 1.
The promoters' holding has declined from 42.98% (September 30, 2023) to 42.19% (March 31, 2024). The counter is well managed above the par value to tempt investors.
Review By Dilip Davda on May 28, 2024
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
