MKVenures RI issue review - (May apply)

•    MCL is in the business of trading/investing in securities and lending.
•    It has posted superb performance since FY21.
•    The RI is at a discount of 27.13% based on its last traded price of Rs. 1284.50
•    The promoter's holding is 83.66% and it may have to dilute to 75% to stay listed.
•    Well-informed/risk seekers may consider parking funds. 

ABOUT COMPANY:
MKVentures Capital Ltd. (MCL) was originally incorporated in 1991 as Kakani Textiles Ltd. and subsequently, it changed its name to Hindustan Sanforisers Ltd. in 1993, then to IKAB Securities & Investments Ltd. in 1998 and then to its current name in 2022. Currently, it is a non-deposit-taking Non-Banking, Financial Company and is registered with RBI. 

It was engaged in providing DP services for CDSL and NSDL and also being a member of BSE and NSE as a trading member. However, it initiated the surrendering of its DP and Exchange membership, but SEBI has kept it on hold due to pending adjudication proceeding against IKAB and their erstwhile promoters. Now that SAT has dismissed the SEBI order, MCL has initiated the surrender process afresh. 

MCL has chosen BSE as its designated exchange to carry on its current business of trading/investment in shares and securities as well as the lending of funds. As of December 31, 2022, it had just 3 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 427050 equity shares of Rs. 10 each at a fixed price of Rs.936 per share to mobilize Rs. 39.97 cr. The issue opens for subscription on April 17, 2023, and will close on April 25, 2023. MCL is offering RI in the ratio of 1 for 8 to eligible stakeholders as of the record date of April 04, 2023. The full money is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. MCL is spending Rs. 0.50 cr. for this RI process and from the net proceeds, it will utilize Rs. 38.97 cr. for augmenting its capital base and funding for its NBFC activities, and Rs. 0.50 cr. for general corporate purposes. 

Choice Capital Advisors Pvt. Ltd. is the sole lead manager and Link Intime India Pvt. Ltd. is the registrar of the issue. 

Post-RI, MCL's current paid-up equity capital of Rs. 3.42 cr. will stand enhanced to Rs. 3.84 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 359.75cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, MCL has posted a total income/net profit - (loss) of Rs.1.58 cr. / Rs. - (1.16) cr. (FY20), Rs. 8.31 cr. / Rs. 2.26 cr. (FY21), and Rs.13.72 cr. / Rs. 4.70 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 11.13 cr. on a total income of Rs. 16.90 cr. 

DIVIDEND POLICY:
The company has not declared any dividends for the last five years. 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: 514238 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 1129.00 on March 31, 2023, and opened on an ex-right basis at Rs. 1107.00 on April 03, 2023. Since then, it has marked a high/low of Rs. 1365.00 / Rs. 1107.00. The scrip last closed at Rs. 1284.50 as of April 13, 2023. For the last 52 weeks, it has posted a high/low of Rs. 1726.56 / Rs. 544.46. 

The new management opted for a voluntary delisting process in July 2022, but could not succeed. 

The promoters' holding has been constant at 83.66% for the last two quarters ended on December 31, 2022. The counter is well managed above the RI offer price to lure investors.