GACM Techno RI May 2025 review - (Avoid)

•    This is the 2nd RI from the company since July 2024.
•    The company that was originally incorporated as broking firm changed its business model and currently providing financial consultancy and related IT services.
•    It posted inconsistency in its financial performances with losses till FY23.
•    The counter is currently trading at a discount to its RI value.
•    Stay away from this “High Risk/No Return” at par bet.

PREFACE:
GTL’s RI is opening on May 06, 2025, but its offer document is dated April 22, 2025 and was made available on the designated exchange website only on May 05, 2025 noon. This appears to be deliberation of providing the necessary info in the 11th hour and keeping investor masses in general guessing about its valuations. Why the watchdog body is not taking this in to consideration and provide rule frame-timeline for RIs in this regard? Currently the counter is trading below par value and raises major concern. It also fared poorly till FY23 and perhaps posted profitable business ahead of RI to tempt investors at large.

ABOUT COMPANY:
GACM Technologies Ltd. (GTL) was originally incorporated as Brilliant Securities Ltd., subsequently changed to Brilliant Capital Ltd., and then to Stampede Capital Ltd., and finally to current one.  

It changed the business line from Stock Broking to current business line of Information Technology after expulsion of the Company as Trading Member by National Stock Exchange of India Limited on August 19, 2022 and Indian Commodity Exchange Limited on August 19, 2022. Currently, it is engaged in Financial Consultancy which includes consultancy on all corporate and allied matters and engagement in all acts of businesses as may be related or ancillary to the above including but not limited to designing/ developing of software solutions related to the risk management and Internal Control Management functions of the Companies including vending, marketing, and installation of the same for Corporate Clients.

During Financial Year 2022-23 onwards the Company started doing Financial Consultancy related services which is termed as Digital Solutions to the clients. GTL strongly believes in helping client find innovative solutions to their business problems. It brings expertise through effective ideas and technologies that work for. The vertical offerings of solutions bring a rich experience to customers to enhance their business. It has learnt that ordinary business can deliver extraordinary results only through innovation. It provides services for three sectors i.e., Edtech, Digitech and Insuretech. As of March 31, 2024, it had 29 employees on its payroll.

ISSUE DETAILS:
The company is offering Rights Issue (RI) of 423283900 equity shares and 73526112 equity DVR shares of Re. 1 each at par to mobilize Rs. 49.68 cr. The RI opens for subscription on May 06, 2025 and will close on June 02, 2025. The company is offering RI in the ratio of 51 equity shares for every 82 shares and 82 DVR held by the eligible stakeholders as of the record date of April 28, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 32.63 cr. for capex on purchase of software, hardware and servers, Rs. 4.50 cr. for acquisition of similar business, Rs. 11.80 cr. for general corporate purposes. 

This RI is self-managed by the company itself and Venture Capital and Corporate Investments Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity/DVR shares of Rs. 68.06 cr. / Rs. 11.82 cr. will stand enhanced to Rs. 110.39 cr. / Rs. 19.17 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 129.56 cr. (1000 DVR share have voting right of equal to 1 equity share).

FINANCIAL PERFORMANCE:
On the financial performance front, the company posed total income/net profit/- (loss) of Rs. 10.51 cr. / Rs. – (1.00) cr. (FY21), Rs. 5.79 cr. / Rs. – (8.08) cr. (FY22), Rs. 9.64 cr. / Rs. – (1.22) cr. (FY23), Rs. 7.24 cr. / Rs. 1.11 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 0.77 cr. on a total income of Rs. 4.97 cr. Thus, it posted inconsistent track record with loss making operations till FY23. 

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. However, the offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 531723 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 0.76 on April 25, 2025 and opened on an ex-right basis at Rs. 0.70 on April 28, 2025. Since then, it has marked a high/low of Rs. 0.76 / Rs. 0.68. The scrip last closed at Rs. 0.72 as of May 05, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 1.80 / Rs. 0.57. While it is currently quoting at a discount, it is offering RI at par value and it’s a big surprise as to how the concern exchanges have given permission for this issue.

The promoters’ holding has been constant at 4.13% for the last three quarters ended with March 31, 2025. The counter is well managed above the par value to tempt investors.