• QDML is engaged in the media and entertainment business.
• The company has been posting losses for the reported periods of the offer documents.
• RI is at a discount of 67% to its last trade price of Rs. 150 as of January 06, 2023.
• Well-informed cash surplus/risk seekers may consider parking funds for long-term rewards.
ABOUT COMPANY:
Quint Digital Media Ltd. (QDML) - erstwhile known as Gaurav Mercantiles Ltd. - is engaged in the media and entertainment business under the brand "The Quint". The Company is presently operating in the M & E-business through its presence in the digital news media segment with three leading digital media platforms viz.: "www.thequint.com", "www.hindi.thequint.com" and www.thequint.com/fit.
The digital media platforms of the Company disseminate news, opinions, and current affairs content on India and the world covering multiple categories such as governance, politics, economy, business, entertainment, sports, technology, education, lifestyle, health and fitness, gender issues, and more. The content is purposively oriented towards digital engagement and speaks in the language of its target audience. To address the varied interests and viewing habits of the audience, various formats include live news, blogs, hot wires, photos, videos, articles, quint lab (interactive content, special projects, statistics/ infographics, etc.), explainers, audio podcasts, fact checks, and more.
Each of the digital media platforms also has its own social media channels on all major platforms including Facebook, Instagram, YouTube, Twitter, and more. The social media channels have a substantial number of followers or subscribers and a sizeable part of the total engagement and views generated by the Company are on social media. The company is the only listed pure-play digital news media player in India. It stands out amongst peers for its high standard of journalism, content innovations, and ability to engage the millennials and zoomers. As of September 30, 2022, it has 174 employees on its payroll.
ISSUE DETAILS:
The company is offering a rights issue (RI) of 25000000 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 125 cr. QDML is issuing 42 shares against 37 shares held by the eligible shareholders as of the record date of December 22, 2022. The issue opens for subscription on January 09, 2023, and will close on January 24, 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. The company is spending Rs. 4.50 cr. for this RI, and from the net proceeds, it will utilize Rs. 37.50 cr. for the exercise of a call option under the Quintype India SHA, Rs. 8.61 cr. for the acquisition of QML shares, Rs. 5.38 cr. for the purchase of Spunklane Media Shares, Rs. 38.26 cr. for the repayment/prepayment of certain loans, and Rs. 30.75 cr. for general corporate purposes.
Choice Capital Advisors Pvt. Ltd. is the sole lead manager for this issue and Skyline Financial Services Pvt. Ltd. is the registrar of the issue.
Post-RI, QDML's current paid-up equity capital of Rs. 21.97 cr. will stand enhanced to Rs. 46.97 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 234.84 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, QDML has (on a consolidated basis) posted a total revenue/net profit (loss) of Rs. 73.59 cr. / Rs. - (81.92) cr. (FY20), Rs. 39.16 cr. / Rs. - (61.12) cr. (FY21), and Rs. 61.55 cr. / Rs. - (24.87) cr. (FY22). For H1 of FY23, it posted a loss of Rs. - (10.86) cr. on a total income of Rs. 38.78 cr.
As of September 30, 2022, its paid-up equity capital of Rs. 21.96 cr. is supported by free reserves of Rs. 36.30 cr.
DIVIDEND POLICY:
The company 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: 539515 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 323.70 on December 21, 2022, and opened at Rs. 175.60 on an ex-right basis on December 22, 2022. Since then, it marked a high/low of Rs. 175.60/Rs. 140.35. The scrip last closed at Rs. 150.00 on January 06, 2023. The scrip has posted the last 52 weeks' high/low of Rs. 350.93/ Rs. 140.35. The counter is well managed with a thin volume. The RI is at a discount of nearly 67% to its last quote. The promoter's shareholding has been constant at 56.55% for the last three quarters ended in September 2022.
Review By Dilip Davda on January 6, 2023
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.
