Lesha Ind. BSE RI review - (Avoid)

•    The company that was incorporated for financial services has entered in to trading of steel products, chemicals and other commodities. 
•    It has posted minuscule financial performance which is not in line with its asking price.
•    The counter is well operated by vested interest above RI price.
•    There is no harm in skipping this risky bet.

PREFACE:
The company that has minuscule financial performance so far wants Rs. 49+ cr. for its debt reduction, office purchase etc. The offer document has many anomalies and it is highly surprising how the regulatory body has approved this offer document. From the financial angle and the nature of business, it is a high risk bet. Rs. 28.6 cr. post-RI equity may face its servicing issue. 

ABOUT COMPANY:
Lesha Industries Ltd. (LIL) that was incorporated for financial services has now entered in the business of trading in steels products and other goods. It also operates in chemical products. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 176000000 equity shares of Re. 1 at a fixed price of Rs. 2.80 per share to mobilize Rs. 49.28 cr. The RI opens for subscription on July 22, 2024, and will close on August 05, 2024. The company is offering RI in the ratio of 8 for 5 to its eligible stakeholders as of the record date of July 12, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 10.11 cr. for working capital, Rs. 6.00 cr. for purchase of new office, Rs. 20.42 cr. for adjustment of unsecured loans of promoters/promoter group, and Rs. 12.00 cr. for general corporate purposes. 

The RI is self-managed by the company itself and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 11.00 cr. will stand enhanced to Rs. 28.60 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 80.08 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last XXX fiscals, the company has posted a total income/net profit / -(loss) of Rs. 6.91 cr. / Rs. 0.19 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 6.69 cr. (with other income of Rs. 6.55 cr.) on a total income of Rs. 9.41 cr. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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: 533602 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 4.48 on July 11, 2024, and opened on an ex-right basis at Rs. 3.63 on July 12, 2024. Since then, it has marked a high/low of Rs. 4.70 / Rs. 3.33. The scrip last closed at Rs. 4.02 as of July 19, 2024. For the last 52 weeks' it has posted a high/low of Rs. 4.70 / Rs. 2.38. The counter is currently under ASM ST: Stage 1.

The promoters' holding has been constant at 41.44% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to tempt investors.