Edvenswa Enterprises RI review (May apply)

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•    EEL is in the IT solution and service-providing segment. 
•    Due to its recent transaction, the financial data on a consolidated basis is available only for the last 18 months. 
•    Based on its financial data and the current market price on the exchange, the issue appears reasonably priced. 
•    Investors may consider investing in this RI with a long-term perspective. 

Edvenswa Enterprises Ltd. came into existence post a transaction between KLK Electricals Ltd. and Edvenswa Tech INC in November 2021 and was approved in December 2021. Following this transaction, an open offer got triggered during that period and was completed by February 16, 2022. 

Edvenswa Enterprises Ltd. (EEL) - formerly known as KLK Electrical Ltd.) is a Holding Company of Edvenswa Tech INC with consolidated business interests in software development, enterprise solution engaged in the business of providing a range of Information Technology ("IT") solutions to companies across sectors such as Healthcare & Life Sciences, Supply Chain & Logistics, Banking & Financial Services, Energy, Education and Environment etc. It designs, develops and maintains software systems and solutions, creates new applications and enhances the functionality of customers' existing software applications using EEL's proprietary tools, frameworks and processes which accelerate the overall delivery process with higher quality.

Edvenswa Group endeavours to bring together creativity and knowledge with a positive business strategy to furnish the requirements of diverse clients with an inclusive range of services which are comprehensive and cost-effective so that the client can focus on their core competencies to improve or expand their businesses. The Edvenswa Group delivers services across all stages of the Software Development life-cycle, which enables it to work with a wide range of customers and to develop, enhance and deploy customers' software applications. The various services offered by the Company are UI/UX Design & Development; Rapid Prototyping & Product Development for Customers; Enterprise Application Engineering; Software Quality Assurance; Business Process Automation using Robotic Process Automation (RPA) tools; Social/Mobile Application Development; Application Integration, Maintenance & Migration Services; Cloud Migration Services; DevOps Engineering; Data Management & Integration; Big Data, Analytics & Data Science related Services; Application Integration; Mobile Application Development & Integration; and Extended R&D Partnering etc.

Its comprehensive suite of service offerings allows it to attract new customers and expand existing customer relationships. The company offers custom solutions for Smart Cities & Villages using the best of the breed solutions; It offers solutions to support continuous education of Customers' Workforce using a highly customizable and scalable Learning Management platform; it designs and develops Intelligent Agents (ML/AI-based) etc. to enhance the operational efficiency of customers and help in strategizing their business objectives. As of the date of filing this offer document, it had 29 employees on its payroll.

The company is coming out with a rights issue of 9080000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share to mobilize Rs. 22.70 cr. The company is offering RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of February 07, 2023. The issue opens for subscription on February 16, 2023, and will close on March 08, 2023. The full money is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on BSE. EEL is spending Rs. 0.55 cr. for this RI process and from the net proceedings, it will utilize Rs. 3.15 cr. for expansion of business operations in India, and Rs. 15.00 cr. for investment in its wholly owned subsidiary for expansion, Rs. 4.00 cr. for general corporate purposes. 

Finshore Management Services Ltd. is the sole lead manager while Cameo Corporate Services Ltd. is the registrar of the RI, while. Aarthi Consultants (P) Ltd. is the registrar of the company. So, another registrar for the RI purpose raises eyebrows. 

Post-RI, EEL's current paid-up equity capital of Rs. 9.08 cr. will stand enhanced to Rs. 18.16 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 45.40 cr. 

On the financial performance front, the company has (on a consolidated basis) posted a turnover/net profit of Rs. 39.06 cr. / Rs. 3.73 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 2.62 cr. on a turnover of Rs. 22.30 cr. 

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. 103.55 on February 06, 2023, and opened on an ex-right basis at Rs. 63.10 on February 07, 2023. Since then, it has marked a high/low of Rs. 66.85 / Rs. 59.25. The scrip last closed at Rs. 65.45 as of February 10, 2023. For the last 52 weeks, it has posted a high/low of Rs. 75.82 / Rs. 17.749. The promoters' holding marked roller coaster trends as it declined from 71.24% (June 22 Q) to 69.40% (September 22 Q) and rose to 72.14% (December 22, Q). Thus some market buying is done by promoters to bring the counter in limelight. The counter is currently under ASM ST - Stage 1 and raises concerns.

Conclusion / Investment Strategy

The company has posted limited financial data post transactions between KLK Electricals and Edvenswa Tech INC. Considering its financial data for the last 18 months and the ongoing market price, this RI is at an attractive discount, investors may park funds with a long-term perspective.

Review By Dilip Davda on Feb 13, 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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

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 Edvenswa Enterprises Limited RI Views / Analysis / Recommendations ...

The Edvenswa Enterprises Rights Issue 2023 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 Edvenswa Enterprises Rights Issue 2023 worth investing. The Edvenswa Enterprises Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Edvenswa Enterprises Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Edvenswa Enterprises Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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