Dudigital Global RI review (May apply)

• DGL is engaged in tours and travel-related services.
• It is operating in a highly competitive and fragmented segment.
• Its financial performance for FY22 and FY23 has no match for the asking price.
• Well-informed investors may park funds for medium-term rewards.

PREFACE:
The company came under the banner of Du Digital Technologies Ltd. with its maiden IPO worth Rs. 4.49 cr. at a price of Rs. 65 for an equity share of Rs. 10 each in August 2021. The issue was then lead-managed by Hem Securities Ltd. and now it is coming out with an RI and is being managed on its own. The counter is well-managed and is currently quoting above 540 P/E and has no match with its listless financial performance.

ABOUT COMPANY:
Dudigital Global Ltd. (DGL) - erstwhile known as Du Digital Technologies Ltd., was originally incorporated as "Diva Envitec Filtration Technologies Private Limited". Subsequently, the name of the company was changed to "DU Digital Technologies Private Limited" pursuant to a special resolution passed by the shareholders. Thereafter, the Company was converted from a private limited company to a public company vide special resolution passed by the shareholders, and the name of the Company was changed to "DU Digital Technologies Limited" and further it was changed to "Dudigital Global Limited" pursuant to a special resolution passed by the shareholders.

DGL broadly has four business verticals of services viz. Visa Services, Residency/Citizenship acquisition services, Business Setup Approvals Services in Special Zones, and DuVerify. It provides exclusive services for the states of Kolkata, West Bengal, Odisha, Bihar, Jharkhand, Chhattisgarh, and Sikkim.

Along with visa services, it offers a bouquet of value-added services tailored specifically for every client. With an unwavering focus on delivering exceptional customer experiences, the company has designed these services to cater to the unique needs and preferences of clients. By concentrating its efforts on this market, it has been able to develop deep expertise and insights into the intricacies of visa processing and related services. As of the date of filing this RI-LoO, it had 53 employees on its payroll.

ISSUE DETAILS:
The company has come out with a Rights Issue (RI) of 11622080 equity shares of Rs. 2 each at a fixed price of Rs. 26.50 per share to mobilize Rs. 30.80 cr. The issue has already opened for subscription on September 29, 2023, and will close on October 16, 2023. The company is offering RI in the ratio of 1 share for every 5 shares held by the eligible stakeholders as of the record date of September 22, 2023. The full amount is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on NSE. DGL is spending Rs. 0.30 cr. for this RI process and from the net proceedings, it will utilize Rs. 8.00 cr. for augmenting capital base as well as fund requirement, Rs. 15.00 cr. for working capital, land Rs. 7.50 cr. for general corporate purposes.

The issue is self-managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar of the issue.

Post-RI, DGL's current paid-up equity capital of Rs. 11.62 cr. will stand enhanced to Rs. 13.95 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 184.79 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 9.81 cr. / Rs. 0.13 cr. (FY22), and Rs. 38.20 cr. / Rs. 0.67 cr. (FY23). The company has posed growth in its top lines and bottom lines. However, the performance does not match the asking price.

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 NSE WEBSITE DATA: SCRIP CODE: DUGLOBAL (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 62.40 on September 21, 2023, and opened on an ex-right basis at Rs. 58.95 on September 22, 2023. Since then, it has marked a high/low of Rs. 58.95 / Rs. 45.50. The scrip last closed at Rs. 47.75 as of September 29, 2023. For the last 52 weeks, it has posted a high/low of Rs. 302.00 / Rs. 39.65. As of 29.09.23, its NAV stood at Rs. 7.59 per share and the last trade took place at a P/E of 596.88. This indicates that the RI is greedily priced.

The promoters' holding has been constant at 65.93% for the last three quarters ended on Sept. 30, 2022. The counter is well-managed above the RI price to lure investors.

Conclusion / Investment Strategy

The company is in the tours and travel-related services which is a highly competitive and fragmented segment. Its financial performance for FY22 and FY23 has no match for the asking price. Based on its FY23 performance, the issue is greedily priced at a hefty P/E of over 540. The issue appears attractively priced based on its last traded price. However, well-informed investors may park funds for medium-term rewards.

Review By Dilip Davda on September 30, 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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.

About 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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

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Dudigital Global Limited Review by Dilip Davda

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

Dudigital Global RI review (May apply)

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