Sahana Systems RI review - (May apply)

•    The company is engaged in providing IT related services and products including hardware.
•    It reported bumper top and bottom lines for FY24 that not only raises eyebrows, but also concern over its sustainability. 
•    It is operating in a highly competitive and fragmented segment. 
•    Based on financial parameters, the RI appears aggressively priced, though it appears lucrative based on the basis of its last traded price. 
•    Well-informed investors may park moderate funds for medium term. 

ABOUT COMPANY:
Sahana Systems Ltd. (SSL) is engaged in the business of offering IT related services including web app development, mobile application development, AI & ML development, Chatbot development, product prototyping, graphics designing, UI / UX design, SEO & ASO, digital marketing, website & application migration, cyber security and outsourcing of IT services. 

Some of the industries it caters to includes healthcare, surveillance, retail, education / e learning, restaurants, banking, media & entertainment and fintech. It is also engaged in the trading of hardware instruments related to Franking Machines / Computers / LED / Laptops. So far, it has been successful in getting repeated order from clients. As of the date of filing this offer document, it had 20 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 549084 equity shares of Rs. 10 each at a fixed price of Rs. 890 per share to mobilize Rs. 48.87 cr. The RI opens for subscription on October 11, 2024, and will close on October 25, 2024. The company is offering RI in the ratio of 1 for 15 to its eligible stakeholders as of the record date of September 25, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on NSE SME Emerge. The trading lot for TI shall be 250 shares and in multiples thereon, thereafter. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 40.00 cr. for working capital, and Rs. 8.12 cr. for general corporate purposes. 

The issue is self- managed by the company itself, and Purva Sharegistry (India) Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 8.24 cr. will stand enhanced to Rs. 8.79 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 781.90 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has (on a consolidated basis) posted a total income/net profit of Rs. 24.14 cr. / Rs. 6.21 cr. (FY23), and Rs. 69.29 cr. / Rs. 18.21 cr. (FY24). The bottom lines for the last two fiscals raises eyebrows as such margins in a highly competitive and fragmented segment appears to be a remote case. The financial data report pages in the offer documents are blurred and unclear.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: SAHANA (FV RS. 10).
The scrip last closed on cum-right basis at Rs. 1415.00 on September 24, 2024, and opened on an ex-right basis at Rs. 1350.00 on September 25, 2024. Since then, it has marked high/low of Rs. 1419.85 / Rs. 1150.05.  The scrip last closed at Rs. 1330.00 as of October 10, 2024. For the last 52 weeks' it has posted a high/low of Rs. 1824.90 / Rs. 231.42. 

The promoters' holding has declined to 61.05% as of July 08, 2024, against 62.88% for two quarters ended June 30, 2024. The counter is well managed and quoting above the RI price, to tempt investors.