IND Renewable RI review (Avoid)

• IREL is in the business of renewable energy and solar power.
• For the last two fiscals, it posted listless performance.
• All its income so far is derived from other income.
• Five-fold increase in equity with minuscule operations raise servicing issues.
• There is no harm in skipping this "High Risk/No Return" bet.

ABOUT COMPANY:
IND Renewable Energy Ltd. (IREL) -erstwhile known as Vakharia Power Infrastructure Ltd.) is incorporated for carrying the business of providing infrastructure, managing, owning, controlling, erecting, commissioning, operating, running, leasing or transferring to third person(s), power plants, plants based on conventional or non-conventional energy sources, solar energy plants, wind energy plants, mechanical, electrical, hydel, tidal, wave energy, thermal, oil, gas, air, sea energy, diesel oil, heavy furnace oil, naphtha, bio-mass, bio-gas, coal, civil engineering works and similar projects and supply of electricity to participating industries, State Electricity Boards, and other boards for industrial, commercial, domestic, public and other purpose and also to provide regular services for repairing and maintenance of all distribution and supply lines and renewable energy sources, waste treatment plants of all kinds and equipment thereof in India and outside India and also manufacturing, procuring, dealing in all ancillary products like transformer battery, inverter etc., required for or capable of being used in connection with the above industry.

The company is primarily engaged in the business of renewable energy and solar power. Thus it is operating in a highly competitive and fragmented segment. As of March 31, 2023 it had 6 employees on its payroll and is in the process of increasing its human resources.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 12109440 equity shares of Rs. 10 each at a fixed price of Rs. 21 per share to mobilize Rs. 25.43 cr. The RI is opening for subscription on January 18, 2024, and will close on January 29, 2024. The company is offering RI in the ratio of 4 for 1 to its eligible stakeholders as of the record date of January 08, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. IREL is spending Rs. 0.25 cr. for this RI process and from the net proceeds, it will utilize Rs. 17.96 cr. for acquiring plant and machinery for setting up a 2.5 MWs solar PV system, Rs. 3.00 cr. for payment of security deposit renting of land for setting up of solar plant, Rs. 4.22 cr. for general corporate purposes.

The issue is self-managed by the company and Navigant Corporate Advisors Ltd. is the advisor while Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, company's current paid-up equity capital of Rs. 3.03 cr. will stand enhanced to Rs. 15.14 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 31.79 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted listless performance. For FY22 it marked a top line of Rs. 0.06 cr. with the help of other income and posted a loss of Rs. Rs. - (0.09) cr. and for FY23 it had no income but made a minuscule profit of Rs. 0.001 cr. For 3Qs of FY24 ended on December 31, 2023, it earned a net profit of Rs. 0.35 cr. on other income of Rs. 0.37 cr.

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: 536709 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 27.68 on January 01, 2024, and opened on an ex-right basis at Rs. 21.35 on January 08, 2024. Since then, it has marked a high/low of Rs. 24.27 / Rs. 21.23. The scrip last closed at Rs. 24.00 as of January 15, 2024. For the last 52 weeks' it has posted a high/low of Rs. 26.83 / Rs. 7.75.

The promoters' holding has been constant at 14.36% for the last three quarters ended with Sept. 30, 2023. The counter is well managed above the RI price to lure investors. Low promoter holding raises concern.

Currently, trading it restricted by BSE for this counter and it is under GSM - Stage 4.

Conclusion / Investment Strategy

The company has posted listless performance for the last two fiscals and has reported some profits for 9M-FY24 with other income. Promoter’s holding is just around 14.36% and the counter is operated by vested interests to keep it above the RI price to lure investors. Five-fold hike in total equity post RI with minuscule earnings may pose capital servicing issue. The counter currently has restricted trade at BSE with GSM-Stage 4 tag. It is operating in a highly competitive and fragmented segment. There is no harm in skipping this “High Risk/No Return” bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on January 16, 2024

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

More Ind Renewable Energy Ltd RI Views / Analysis / Recommendations ...

Ind Renewable Energy Ltd Review by Dilip Davda

The IND Renewable Energy Rights Issue Jan 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if IND Renewable Energy Rights Issue Jan 2024 worth investing. The IND Renewable Energy Rights Issue Jan 2024 Note sets the Rights Issue expectations in systematic way which tells you if IND Renewable Energy Rights Issue Jan 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in IND Renewable Energy Rights Issue Jan 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

1 Comments

1. Manish Ashar Link|February 2, 2024 2:54:15 PM

Thanks for your valuable post. I was about to apply thinking it is IREDA, but after going through this post, came to know it is different company.

IND Renewable RI review (Avoid)

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