• This is the 2nd RI from the company since May 2023.
• The company is engaged in financial services as an NBFC.
• It marked inconsistency in its bottom lines for the reported periods.
• The sudden boost in its bottom lines for H1-FY25, that raises eyebrows.
• The counter is well managed above RI price by vested interests to tempt investors.
• There is no harm in skipping this "High Risk/Low Return" Bet.
PREFACE:
This is the 2nd RI from the company since May 2023. The company's RI is opening on December 10, 2024, while its RI documents were made available only on December 09, 2023 on designated exchange BSE. This kind of last minute submission of offer documents is becoming a latest fashion. Concerned authorities and regulators have to take this matter up the sleeve ASAP.
ABOUT COMPANY:
Enbee Trade & Finance Ltd. (ETFL) is a Non Deposit Accepting Non-Banking Financial Company (NBFC) registered with RBI to carry on the NBFC activities under Section 45IA of the Reserve Bank of India Act, 1934 bearing Registration no. 13.00691 dated April 20, 1998. As the Company has been granted NBFC License by RBI, the Company's business model is mainly centered on Loan activities i.e. granting of unsecured loans to body corporates and individuals. It needs financial resources to fuel the growing demand and to seize the opportunities presented by the market from time to time.
It has been in the business for the last 25 years. There are no holding as well as subsidiary companies of the Company. The objects clause of its Memorandum of Association enables it to undertake existing activities and the activities for which funds are being raised by it through this Issue. Its loan portfolio stood at Rs. 78.38 cr. as of June 30, 2024, and at Rs. 82.90 cr. as of September 30, 2024. The offer document is silent on its manpower data.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 34676061 equity shares of Rs. 10 each at a fixed price of Rs. 13 per share to mobilize Rs. 45.08 cr. The RI opens for subscription on December 10, 2024, and will close on December 30, 2024. The full amount is to be paid on application for number of shares applied. The company is offering RI in the ratio of 121 for 50 to its eligible stakeholders as of the record date of November 28, 2024. Post allotment, shares will be listed on BSE. The company is spending Rs. 1.00 cr. for this RI process, and from the net proceeds, it will utilize Rs. 29.69 cr. for repayment of unsecured loans taken by company from promoter and promoter group, and Rs. 14.39 cr. for augmenting capital base.
The RI is solely lead managed by Saffron Capital Advisors Pvt. Ltd., and Cameo Corporate Services Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 14.32 cr. will stand enhanced to Rs. 49.00 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 63.70 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last xx fiscals, the company has posed a total revenue/net profit of Rs. 3.64 cr. / Rs. 0.90 cr. (FY22), Rs. 4.87 cr. / Rs. 0.14 cr. (FY23), and Rs. 10.26 cr. / Rs, 1.56 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 2.49 cr. on a total revenue of Rs. 8.32 cr. It posted inconsistency in its bottom lines from FY22 to FY24. The sudden boost in its bottom lines for H1 of FY25 raise eyebrows.
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 BSE WEBSITE DATA: SCRIP CODE: 512441 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 14.56 on November 27, 2024, and opened on an ex-right basis at Rs. 14.70 on November 28, 2024. Since then, it has marked a high/low of Rs. 14.70 / Rs. 13.11. The scrip last closed at Rs. 13.38 as of December 09, 2024. For the last 52 weeks' it has posted a high/low of Rs. 27.90 / Rs. 9.24.
The promoters' holding has been constant at 36.43% for the last three quarters ended with Sept. 30, 2024. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on December 9, 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.
