• The company is in the business of trading in shares and financial related services.
• It posted listless financial performance and RI appears aggressively priced.
• The company is operating in a highly competitive and fragmented segment.
• There is no harm in skipping this "High Risk/Low Return" bet.
PREFACE:
For this RI, the offer documents were made available on BSE only on December 11, 2024, morning, while the offer document is dated November 27, 2024. The delay in uploading the offer documents on designated exchanges is turning worrisome now a day. Can regulators or concern authorities throw some light on this??
ABOUT COMPANY:
Moongipa Capital Finance Ltd. (MCFL) is primarily engaged in the business of trading in shares, financing (Corporate and Personal include Debt syndication, Loans against securities, Intercorporate deposits, Private placement arranger, Distribution and Marketing of third-party financial products such as fixed deposits, debenture, commercial paper, bonds etc.
The Company is a Non-systematically important non-Deposit Taking NBFC categorized as Investment and Credit Company i.e. ICC registered with the RBI. With decades of experience in lending, MCFL worked closely with SMEs and has transformed the way corporate lending is done. Their comprehensive expertise in a variety of sectors helps to provide working capital solutions to all kinds of businesses from small start-ups to large corporations. As of March 31, 2024, it had 13 employees on its payroll. The company mulls scaling up of its operations with new innovated products launches.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 6109600 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share to mobilize Rs. 15.27 cr. The RI opens for subscription on December 12, 2024, and will close on December 27, 2024. The full amount is to be paid on application for number of shares applied. The company is offering RI in the ratio of 2 for 1 to its eligible stakeholders as of the record date of December 03, 2024. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.30 cr. for this RI process, and from the net proceeds, it will utilize Rs. 14.50 cr. for augmenting capital base, and Rs. 0.47 cr. for general corporate purposes. It appears that the company has posted improved performances for the last 15 months' and are non-convincing. It is operating in a highly competitive and fragmented segment.
The RI is self-managed by the company itself, and Skyline Financial Services Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up capital of Rs. 3.05 cr. will stand enhanced to Rs. 9.16 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 22.91 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total income/net profit/ - (loss) of Rs. 1.98 cr. / Rs. - (1.52) cr. (FY23), Rs. 9.62 cr. / Rs 1.75 cr. (FY24), For Q1 of FY25 ended on June 30, 2024, it marked a profit of Rs. 1.01 cr. on a total income of Rs. 3.38 cr. The sudden boost in its top and bottom lines for FY24 and Q1 of FY25 raises eyebrows, and concern over its sustainability, since is it operating in a highly competitive segment.
DIVIDEND POLICY:
The company has not declared any dividends for the last five fiscals. 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: 531402 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 56.56 on November 27, 2024, and opened on an ex-right basis at Rs. 29.7 on November 28, 2024. Since then, it has marked a high/low of Rs. 32.84 / Rs. 24.22. The scrip last closed at Rs. 27.75 as of December 11, 2024. For the last 52 weeks' it has posted a high/low of Rs. 32.84 / Rs. 11.09.
The promoters' holding has been constant at 57.83% for the last three quarters ended with Sept. 30, 2024. The counter is well managed above the RI by vested interests to lure investors.
Review By Dilip Davda on December 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.
