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Emerald Leasing Rights issue review (May apply)

Emerald Leasing Finance and Investment Company Limited Logo

•    The company is engaged in lending activities as a registered NBFC.
•    It has posted average performance for the last two and a half years.
•    Post this issue, its equity rises over three-fold.
•    At par rights offer may be considered by risk savvy - cash surplus shareholders.


ABOUT COMPANY:
Emerald Leasing Finance and Investment Co. Ltd. (ELFICL) is a Non-Deposit taking Non-Banking Financial Company (NBFC-ND) registered with RBI. The company's business model is centred around lending activities (granting of loans & advances). As an NBFC, it operates in the business of providing loans to MSMEs and retail customers. It also helps in facilitating finance to some of its customers through other banks and NBFCs. The company through its Subsidiary Company are also engaged in the business of acting as a Direct Selling Agent for various Banks and NBFCs.

ELFICL's loan portfolio as of September 30, 2020, is INR 11.28 cr.

ISSUE DETAILS:
The company is offering a rights issue in the ratio of 42 shares for every 19 shares held to the shareholders whose names were appearing in the register of the company as of January 28, 2021. The company will be issuing 20000000 equity shares of Rs. 10 each at par value to mobilize Rs. 20 cr. From the market. The issue opens for subscription on March 22, 2021, and will close on April 05, 2021.

The issue is solely lead managed by Keynote Financial Services Ltd. and MAS Services Ltd. Is the registrar to the issue. Post allotment, shares will be listed on BSE.

The Promoters and members of the Promoter Group of the Company through their letters dated February 18, 2021 (the 'Subscription Letters') have confirmed that they intend to subscribe jointly and/or severally along with other Promoter group members to the full extent of their Rights Entitlement in the Issue and to the full extent of any Rights Entitlement renounced in their favour by any other Promoter or promoter group member and to the extent of the unsubscribed portion (if any) of the Issue. Further, the Promoters and Promoter Group may also apply for additional shares along with their Rights Entitlement and/or renunciation.

Post issue company's current paid-up capital of Rs. 9.04 cr. Will stand enhanced to Rs. 29.04 cr. Thus it increases to over three-fold.

ELFICL is spending Rs. 0.66 cr. for this rights issue process and out of net proceeds, it will use Rs. 19.34 cr. For augmenting their capital base.
 
FINANCIAL PERFORMANCE:
On the financial performance front, ELFICL has (on a consolidated basis) posted total income/net profits of Rs. 6.72 cr. / Rs. 1.18 cr. (FAY19) and Rs. 7.87 cr./ Rs. 1.29 cr. (FY20). For the first half of the current fiscal ended on September 30, 2020, it has earned a net profit of Rs. 0.47 cr., on a total income of Rs. 1.71 cr. As of said date, its paid-up equity capital of Rs. 9.04 cr., is supported by Rs. 6.28 cr.

SCRIP MOVEMENT:
ELFICL last quoted on cum-right at Rs. 14.50 on January 25, 2021, and it turned ex-right on January 27, 2021, at Rs. 12.50. The company has marked the last 52 weeks high/low of Rs. 14.70 /Rs. 4.50. It last traded at Rs. 12.73 (as of March 19, 2021). With the rights issue pricing, it is looking for a market cap of Rs. 29.04 cr. Whereas with the last traded price it has a market cap of Rs. 36.97 cr.


Conclusion / Investment Strategy

As the counter is witnessing thin trades, risk savvy shareholders with surplus fund may consider investing in this at par rights issue at their own risks with long term perspectives.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Mar 20, 2021

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

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