Luharuka Media RI review - (Avoid)

•    The company is engaged in financial services which is highly competitive and fragmented segment.
•    It posted minuscule financial performances for the last two fiscals and are not in line with the asking price.
•    Based on last traded price of Rs. 5.47, the RI appears lucrative, but the counter is well managed by vested interests to tempt investors.
•    There is no harm in skipping this pricey "High Risk/ Low Return" bet.

ABOUT COMPANY:
Luharuka Media & Infra Ltd. (LMIL) is following a business model centered around lending activities such as granting of loans and advances. As an NBFC, it operates in the business of providing corporate and retail loans. It provides finance to clients after satisfying itself about the credit worthiness and repayment capacity of borrowers after evaluating the material risks associated with the business/ project/ proposal for which loan has been sought. The Company started its commercial operations in 1981 and certificate of registration as NBFC by RBI was received in 2002.

The company's offer document is silent on its employees' strength data. Company's name is not matching its current business activities. 

ISSUE DETAILS:
The company is coming out with RI of 93720000 equity share of Re. 1 each at a fixed price of Rs. 3 per share to mobilize Rs. 28.12 cr.  The RI is opening for subscription on August 14, 2024, and will close on August 28, 2024. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of August 02, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.26 cr. for this RI process, and from the net proceeds, it will utilize Rs. 25.00 cr. for working capital and Rs. 2.86 cr. for general corporate purposes.

The RI is solely lead managed by Comfort Securities Ltd. and Adroit Corporate Services Pvt. Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 9.37 cr. will stand enhanced to Rs. 18.74 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 56.23 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income of Rs. 1.94 cr. / Rs. 0.67 cr. (FY23), and Rs.  1.65 cr. / Rs. 0.61 cr. (FY24). Thus is marked a minuscule level of performance not matching 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: 512048 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 6.56 on August 01, 2024, and opened on an ex-right basis at Rs. 4.55 on August 02, 2024. Since then, it has marked a high/low of Rs. 6.05 / Rs. 4.55. The scrip last closed at Rs. 5.47 as of August 13, 2024. For the last 52 weeks' it has posted a high/low of Rs. 6.05 / Rs. 2.26. The counter is currently under ESM: Stage 1.

The promoters' holding has been constant around 51.53% for the last three quarters ended with June 30, 2024. The counter is well managed above the RI price to lure investors.