• The company is engaged in digital transformation services focusing on cyber security.
• It has posted an average financial performance with fluctuation profits on almost static top lines.
• The issue appears aggressively priced, based on its performance so far.
• There is no harm in skipping this "High Risk/Low Return" pricey offer.
PREFACE:
The company came with its maiden IPO in May 2022 at a price of Rs. 29 per share to mobilize Rs. 10.13 cr. The mandate was with Fast Track Finsec Pvt. Ltd. and Nirman Share Brokers Pvt. Ltd. as the market maker. For this RI while it is being managed by the company on its own, info on market maker is missing from the offer document. The current market lot for the scrip is 1000 shares while market lot for RI is specified as 750 shares by the designated exchange.
ABOUT COMPANY:
Globesecure Technologies Ltd. (GTL) is a digital transformation company in India with a focus on cyber security. It has executed several cyber security transformation projects, infrastructure, and digital transformation projects for various institutions and also provide similar independent services to clients. Through its wide range of offerings across multiple verticals, the company possesses capabilities spanning the digital lifecycle of services ranging from consultation, architecture, solution design, and implementation, to monitoring and providing managed services.
The company classifies its business into the following lines of business: (i) Cyber Security, (ii) Integrated Enterprise Solutions, and (iii) Managed Services. As of July 02, 2024, it had 14 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 6831261 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize 27.33 cr. The RI has already opened on July 25, 2024, and will close on August 02, 2024. The company is offering RI in the ratio of 3 for 4 to its eligible stakeholders as of the record date of July 12, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE SME Emerge. It is spending Rs. 0.95 cr. for this RI process, and from the net proceeds, it will utilize Rs. 19.54 cr. for incremental working capital, and Rs. 6.83 cr. for general corporate purposes. The market lot for trading of Rights Entitlements will be decided by the Stock Exchange and will be marketable in such lots only. The present tradable market lot of the company is 1000 shares and in multiples thereon. Surprisingly, the info on its market lot for RI is missing and also this being NSE SME Emerge RI, the market maker info it also not available in the offer document. However, as per NSE Website, the market lot for RI is indicated as 750 shares.
The RI is self-managed by the company itself and Skyline Financial Services Pvt. Ltd. is the registrar to the issue.
Post-RI, its current paid-up equity capital of Rs. 9.11 cr. will stand enhanced to Rs. 15.94 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 63.76 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue of Rs. 26.61 cr. / Rs. 1.00 cr. (FY22), Rs.25.85 cr. / Rs. 1.66 cr. (FY23), Rs. 25.01 cr. / Rs. 1.01 cr. It marked almost static top line with fluctuating bottom lines for the reported periods.
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 NSE WEBSITE DATA: SCRIP CODE: GSTL (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 47.00 on July 11, 2024, and opened on an ex-right basis at Rs. 46.70 on July 12, 2024. Since then, it has marked a high/low of Rs. 49.00 / Rs. 43.20. The scrip last closed at Rs. 43.30 as of July 25, 2024. For the last 52 weeks' it has posted a high/low of Rs. 126.89 / Rs. 35.00.
The promoters' holding has been constant at 35.80% for the last three quarters ended with June 30, 2024. The counter is well managed above the RI price to tempt investors.
Review By Dilip Davda on July 25, 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.
