Family Care RI review - (Avoid)

•    FCHL is the healthcare treatment, imaging, and lab test services provider. 
•    It is operating in a highly competitive and fragmented segment. 
•    As of September 30, 2022, it had negative reserves which is a major concern. 
•    Promoter's holding is down from 42.39% to 13.74% in the last three quarters.
•    There is no harm in skipping this RI as it's a High-Risk/Low Return bet. 

ABOUT COMPANY:
Family Care Hospitals Ltd. (FCHL) - the company that was originally promoted at Pharma Offset Ltd. changed its name to Pharma Com (India) Ltd., to Count N Denier (India) Ltd., to Scandent Imaging Ltd., and then finally to Family Care Hospitals Ltd. Thus it kept rechristening itself so far. 

FCHL is currently operating a hospital under the name of "Family Care Hospitals" at Mira Road East, Thane, Maharashtra and is also operating 9 (Nine) imaging centres across the Mumbai Metropolitan region.  These imaging centres provide scanning solutions to ENT and Dental healthcare professionals with information to help them establish or support diagnoses and prescribe medication and treatment for patient care. 

For the convenience of patients, it provides value-added services such as a home collection of specimens, house calls, and various other service delivery or access modes (i.e., at diagnostic centres, SMS, email, web, and mobile portal) for tests and thereafter access for reports. As of September 30, 2022, it had 154 employees on its payroll, and as of October 31, 2022, it was operating with a 100-bed capacity. It is operating from 11 leased properties at various places in Thane and Mumbai. 

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 40767000 equity shares of Rs. 10 each at a fixed price of Rs. 12 per share to mobilize Rs. 48.92 cr. It is offering RI in the ratio of 127 shares for every 100 shares held as of the record date of January 03, 2023, to the eligible stakeholders. The issue opens for subscription on January 23, 2023, and will close on February 07, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.47 cr. for this RI process and from the net proceeds, it will utilize Rs. 12.75 cr. for branding and marketing expenses, Rs. 24.50 cr. for the working capital, and Rs. 11.20 cr. for general corporate purposes. 

Fedex Securities Pvt. Ltd. is the sole lead manager to this RI and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. 

Post RI, FCHL's current paid-up equity capital of Rs. 32.10 cr. will stand enhanced to Rs. 72.87 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 87.44 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, FCHL has posted a turnover/net profit of Rs. 13.26 cr. / Rs. 0.03 cr. (FY20), Rs. 35.37 cr. / Rs. 4.07 cr. (FY21), and Rs. 42.38 cr. / Rs. 5.20 cr. (FY22). 

As per unaudited results submitted to BSE, for the first half of FY23, it earned a net profit of Rs.2.76 cr. on a turnover of Rs. 23.11 cr. Due to accumulated carried forward losses from its previous operations, as of September 30, 2022, its paid-up equity capital of Rs. 32.10 cr. had negative reserves of Rs. - (15.10) cr. and is a major concern.

DIVIDEND POLICY:
It announced a dividend of 1% (FY22) and an interim dividend of 0.5% (FY23) in July 2022 and November 2022 respectively for FY22. This is a bit surprising as its NAV is in red.  It will adopt a prudent dividend policy post-listing of RI, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 516110 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 14.08 on January 02, 2023, and opened on an ex-right basis at Rs. 13.90 on January 03, 2023. Since then, it has marked a high/low of Rs. 15.40 / Rs. 13.05. It last closed at Rs. 13.25 as of January 20, 2023. For the last 52 weeks, it has marked a high/low of Rs. 53.32/ Rs. 10.55. The promoter's holding is declined from 42.39% as of June 30, 2022, to 13.74% as of December 31, 2022, and raises a concern. The counter is well maintained above the RI price to lure investors.