Gretex Corp RI review - (May apply)

•    GCSL is in the business of diversified financial/consultancy services. 
•    The company has posted growth in its top and bottom lines for the last two fiscals.
•    The company has greedily priced its RI issue. 
•    Only well-informed/cash surplus/ risk seeker investors may consider parking funds with long-term perspectives.

PREFACE:
GCSL came with its maiden IPO at a price of Rs. 170 in July 2021 to mobilize Rs. 5.13 cr. Now it is offering RI at a price of Rs. 210 per share. Though the company filed its RI LoO on August 17, 2023, and its record date for eligibility was August 23, 2023, it uploaded its RI documents on the BSE website only on August 29, 2023 post noon. This shows how this company is following the compliances. 

ABOUT COMPANY:
Gretex Corporate Services Ltd. (GCSL) offers diversified financial and consultancy services in the areas of Capital Markets, Corporate Finance, Corporate Restructuring, Debt Syndication, and Compliance Advisory. It started operations in the year 2008, In the initial years the company was engaged in the business of providing project finance services to companies through banks and financial institutions. 

In the year 2011, the company started providing services of the capital market such as Direct listing of companies on nationwide stock exchanges. This new venture gave management an interest in exploring more opportunities in the capital market. So, in the year 2013 it applied for a license of merchant banking with the Securities and Exchange Board of India (SEBI). 

For the past six years, GCSL has been carrying out the business of management of fundraising activities, investment advisory, underwriting of issues, manager, consultant or adviser to any issue including corporate advisory services and as consultant or adviser to the issuer. As of March 31, 2023, it had 27 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 1279513 equity shares of Rs. 10 each at a fixed price of Rs. 210 per share to mobilize Rs. 26.87 cr. The company is offering RI in the ratio of 1 for 8 to eligible stakeholders as of the record date of August 23, 2023. The full amount is to be paid along with the application for the number of shares applied. GCSL is spending Rs. 0.10 cr. for this RI process and from the net proceeds, it will utilize Rs. 23.94 cr. for the purchase of shares from shareholders of Gretex Share Broking Pvt. Ltd. to make it a subsidiary company, Rs. 2.83 cr. for general corporate purposes. Post allotment, shares will be listed on BSE/SME and the market lot will be 90 shares. 

The issue is self-managed by the company and Bigshare Services Pvt. Ltd. is the registrar of the issue. 

The company has issued bonus shares in the ratio of 8 for 1 in October 2022. 

Post-RI, GCSL's current paid-up equity capital of Rs. 10.24 cr. will stand enhanced to Rs. 11.52 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 241.83 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, GCSL has (on a consolidated basis) posted a total income/net profit of Rs. 4.75 cr. / Rs. 1.52 cr. (FY22), and Rs. 15.25 cr. / Rs. 6.52 cr. (FY23). 

DIVIDEND POLICY:
Dividend data is not published in the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. As per the BSE Website, it paid a dividend of 5% for FY22. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 543324 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 286.85 on August 22, 2023, and opened on an ex-right basis at Rs. 276.00 on August 23, 2023. Since then, it has marked a high/low of Rs. 310.00 / Rs. 276.00. The scrip last closed at Rs. 301.50 as of August 29, 2023. For the last 52 weeks, it has posted a high/low of Rs. 310.00 / Rs. 24.78. 

The promoters' holding has declined from 73.48% as of March 31, 2022, to 69.61@ as of March 331, 2023. The counter is well-managed above the RI price to lure investors.