Enbee Trade RI review (Avoid)

• ETFL is operating in the financial services which is highly competitive and fragmented.
• Its financial performance so far is average.
• Based on its performance, the RI is fully priced.
• Twenty-fold jump in its post-RI equity base may face servicing issues.
• There is no harm in skipping this RI.

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. The company has been in the business for the last 25 years. There are no holdings as well as subsidiary companies of the Company.

In the year 2015, the Company has been taken over by new management. It is operating in a highly competitive and fragmented segment. The offer document is silent on the employees' data.

ISSUE DETAILS:
The company is coming out with a rights issue (RI) of 32001000 equity shares of Rs. 10 each at a fixed price of Rs. 15 per share to mobilize Rs.48.00 cr. The issue opens for subscription on May 18, 2023, and will close on June 01, 2023. ETFL is offering RI in the ratio of 20 for 1 to eligible stakeholders as of the record date of May 10, 2023. The full amount is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on BSE. ETFL is spending Rs. 1.00 cr. for this RI process and from the net proceeds it will utilize Rs. 24.90 cr. for repayment of unsecured loans from promoter and promoter group, and Rs. 22.10 cr. for augmenting capital base.

Saffron Capital Advisors Pvt. Ltd. is the sole lead manager for this RI and Cameo Corporate Services Ltd. is the registrar of the issue.

Post-RI, ETFL's current paid-up equity capital of Rs. 1.60 cr. will stand enhanced to Rs. 33.60 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 50.40 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, ETFL has posted a total income/net profit of Rs. 1.96 cr. / Rs. 0.07 cr. (FY21), and Rs. 3.64 cr. / Rs. 0.94 cr. (FY22). For 9M of FY23, it earned a net profit of Rs. 1.55 cr. on a total income of Rs. 5.51 cr. Thus, it has posted average financial data. Twenty-fold jump in its paid-up capital may face servicing issues in the near term.

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. 34.34 on May 09, 2023, and opened on an ex-right basis at Rs. 16.72 on May 10, 2023. Since then, it has marked a high/low of Rs. 20.30 / Rs. 16.72. The scrip last closed at Rs. 20.30 as of May 16, 2023. For the last 52 weeks, it has posted a high/low of Rs. 55.05 / Rs. 12.36. The promoters' holding has been constant at 27.20% for the last three quarters ended on March 31, 2023. The counter is well managed above the par value to lure investors.

Conclusion / Investment Strategy

The company operates in a highly competitive and fragmented segment. Its current financial data is average. Post RI, a twenty-fold jump in its paid-up capital may face servicing issues. The counter is well managed to lure investors to this fully priced RI. There is no harm in skipping it.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 16, 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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

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 ).

More Enbee Trade & Finance Limited RI Views / Analysis / Recommendations ...

Enbee Trade & Finance Limited Review by Dilip Davda

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

Enbee Trade RI review (Avoid)

Conclusion / Investment Strategy

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