GTT Data BSE RI review - (Avoid)

•    The company that was originally incorporated as motion picture producer has recently diversified into IT infra related activities and services.
•    Its recent financial performance data is not in line with asking price.
•    The counter is well managed above RI price by vested interest operators.
•    Though this RI is at a discount of around 69.47% based on its last traded price, it is not worth subscribing as it is a “High Risk/Low Return” bet.

ABOUT COMPANY:
GTT Data Solutions Ltd. (GDSL) erstwhile known as Cinerad Communications Ltd. –  that was originally incorporated as motion picture producers and trading in general merchants, it currently engaged in providing within and outside India the comprehensive IT services encompassing software development, customization, integration and maintenance across diver industries and verticals.  Surprisingly, it has not been doing any activities in the recent past.

Currently our Company manages the operations of its subsidiary companies namely Global Talent Track Private Limited and Itarium Technologies India Private Limited. It holds 55% of the equity share capital of Itarium Technologies India Private Limited which is in the business of providing the technology platform and services to build software solutions for various business needs and 60% of the equity share capital of Global Talent Track Private Limited which is in the business of corporate training and skill development. As of the date of this offer document, it had 30 employees on its payroll.

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 19161915equity shares of Rs. 10 each at a fixed price of Rs. 26 per shares to mobilize Rs. 49.82 cr. The RI is opening for subscription on January 27, 2025, and will close on February 04, 2025. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of January 14, 2025. The company is asking for Rs. 6.50 on application for the number of shares applied, and the rest by one or more call from time to time as determined by the company. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.71 cr. for this RI process, and from the net proceeds, it will utilize Rs. 11.14 cr. for repayment/prepayment of unsecured loans from promoter group, Rs. 9.70 cr. for acquisition of additional equity shares of Itarium Technologies, Rs. 5.00 cr. for acquisition of shares of CRG Solutions, Rs. 6.17 cr. for development of IT Infra and acquisition of license from SEED Infotech, Rs. 12.50 cr. for funding inorganic growth and general corporate purposes. There is a garble in the table of Issue Proceeds on page no. 47 of the offer document.

The RI is self-managed by the company, and MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 19.16 cr. will stand enhanced to Rs. 38.32 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 99.64 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the concluded fiscal, the company has (on a consolidated basis) posted total income/net profit/ - (loss) of Rs. 15.14 cr. / Rs.  - (0.71) cr. (FY24). For H1 of FY25 ended on September 30, 2024, it posted a net loss of Rs. – (1.88) cr. on a total income of Rs. 6.64 cr. Thus its set of financial performance is not in line with the asking price. 

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: 530457 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 163.70 on January 13, 2025, and opened on an ex-right basis at Rs. 92.95 on January 14, 2025. Since then, it has marked a high/low of Rs. 94.70 / Rs. 81.70. The scrip last closed at Rs. 85.15 as of January 24, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 104.94 / Rs. 12.95. The counter is currently under ESM: Stage 1.

The promoters’ holding has been constant at 70.57% for the last three quarters ended with December 31, 2024. The counter is well maintained above the RI price by vested interest operators to tempt investors. The counter is jacked up with thin volumes.