PMC Fincorp RI Review - (Avoid)

•    The company is engaged in the financial related services and investments.
•    It posted inconsistency in its earnings for the reported periods. 
•    Based on its financial data, the issue appears aggressively priced. 
•    It is operating in a highly competitive and fragmented segment.
•    There is no harm in skipping this "High Risk/Low Return" offer.

ABOUT COMPANY:
PMC Fincorp Ltd. (PFL) is a Non-Systemically Important Non-Systematically Important Non-Deposit taking Company categorized as Investment and Credit Company i.e. ICC registered with Reserve Bank of India under Section 45-IA of the Reserve Bank of India Act, 1934 and primarily engaged in financing and investment related activities. 

The Company received the certificate of registration from RBI on November 14, 2014, enabling the Company to carry on business as a Non-Banking Financial Company. PMC Fincorp Limited is primarily engaged in the business of trading in shares, financing (Corporate and Personal Finance), and investing in the securities of Listed and Unlisted Companies. As of the date of this offer letter, it had just 9 employees on its payroll including directors.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 178020400 equity shares of Re. 1 each at a fixed price of Rs. 2.75 per share to mobilize Rs. 48.96 cr. The RI opens for subscription on November 07, 2024, and will close on November 19, 2024. The company is offering RI in the ratio of 1 for 3 to its eligible stakeholders as of the record date of October 25, 2024. 

The full amount is to be paid on application for number of shares applied. 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. 47.66 cr. for augmenting its capital base, Rs. 1.00 cr. for general corporate purposes. 

The issue 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 equity capital of Rs. 53.41 cr. will stand enhanced to Rs. 71.21 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 195.82 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total revenue/net profit/ - (loss) of Rs. 7.38 cr. / Rs. 2.55 cr. (FY22), Rs. 8.50 cr. / Rs. - (6.36) cr. (FY23), Rs. 15.66 cr. / Rs. 11.35 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 5.86 cr. on a total revenue of Rs. 8.05 cr. Thus it marked inconsistency in its financial performances for the reported periods. 

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 534060 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 5.00 on October 24, 2024, and opened on an ex-right basis at Rs. 4.22 on October 25, 2024. Since then, it has marked high/low of Rs. 4.49 / Rs. 3.78.  The scrip last closed at Rs. 3.79 as of November 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 5.26 / Rs. 1.55. 

The promoters' holding has increased merely to 20.13% for the last quarters ended September 30, 2024 against 20.03% for previous two quarters ended on June 30, 2024. The counter is well managed above RI pricing.