• MIFL is engaged in the financial services and operates from Kolkata and Gujarat.
• It is operating in a highly competitive and fragmented segment.
• Its financial performance so far has been listless and not matching the asking price.
• There is no harm in skipping this pricey RI.
ABOUT COMPANY:
Mangalam Industrial Finance Ltd. (MIFL) was incorporated in the year 1983 and after completing 40 years, it continues to provide competitive and tailor- made financial services. It is one of the Non- Banking Finance Companies based out in Kolkata and Gujarat, and strive to deliver its best to meet customers' financial needs.
At MIFL, the atmosphere is characterized by focus and drive, as everyone collaboratively strives for excellence to pursue their goals. The Company has a workforce championing this spirit of MIFL in day-to-day activities. The business model is based on client relationships that are established over period of time rather than a project based execution approach. The Company believes that long-term client relationship fetches better dividends.
Long-term relations are built on trust and continuous satisfaction of the customers. It helps understanding the basic approach of the Company, its products and its market. It also forms the basis of further expansion for the Company, as it is able to monitor a potential product/ market closely.
As the Company has been granted NBFC License by RBI, the Company's business model is mainly centered on Loan activities i.e., financing the two wheelers electric vehicle and granting of unsecured loans to body corporates and individuals.
Major thrust by company to finance EV two wheelers can be attributed to its one of the corporate promoter i.e. Wardwizard Solutions.
The company operates in a highly competitive industry. It faces competition from the full spectrum of public sector banks, private sector banks (including foreign banks), financial institutions, captive finance affiliates of players in various industries, small finance banks and other NBFCs who are active in SME, retail and individual lending. Many of its competitors may have greater resources than MIFL, may be larger in terms of business volume and may have significantly lower cost of funds compared to it. As on December 31, 2023, it had 12 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 123892721 equity shares of Re. 1 each at a fixed price of Rs. 3.95 per share to mobilize Rs. 48.94 cr. The issue opens for subscription on February 12, 2024, and will close on February 26, 2024. The company is offering RI in the ratio of 21 for 163 to its eligible stakeholders as of the record date of January 29, 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. 0.50 cr. for this RI process and from the net proceeds, it will utilize Rs. 48.00 cr. for working capital and augmenting its capital base, and Rs. 0.44 cr. for general corporate purposes.
The issue is self-managed by the company and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue.
Post-RI, company's current paid-up equity capital of Rs. 96.16 cr. will stand enhanced to Rs. 108.55 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 428.79 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/-(loss) of Rs. 2.05 cr. / Rs. 0.67 cr. (FY21), Rs. 1.17 cr. / Rs. 1.34 cr. (FY22), and Rs. 1.33 cr. / Rs. - (5.01) cr. (FY23). Thus it has posted an erratic performance so far and loss for FY23 has eaten away its previous two fiscal's profits.
For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 0.13 cr. on a total income of Rs. 1.25 cr. Thus its performance is not matching the asking price. The company is operating in a highly competitive and fragmented segment.
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: 537800 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 6.99 on January 25, 2024, and opened on an ex-right basis at Rs. 6.69 on January 29, 2024. Since then, it has marked a high/low of Rs. 6.97 / Rs. 5.36. The scrip last closed at Rs. 5.80 as of February 09, 2024. For the last 52 weeks' it has posted a high/low of Rs. 6.97 / Rs. 1.74.
The promoters' holding has been constant at 70.15% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on February 11, 2024
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
