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Samor Reality (BSE SME) RI revew (Avoid)

Samor Reality Ltd Logo

•    SRL is engaged in the reality segment and trading in construction materials.
•    Its financial data marks minuscule operations. 
•    The counter has marked no trades since November 04, 2022.
•    There is no harm in giving this aggressively priced RI a MISS.

PREFACE:
SRL came with its maiden IPO in October 2021 at a price of Rs. 62 per share. For IPO, the mandate was given to Beeline Broking Ltd. Now the same company is coming out with a RI at a more than 50% discounted price and the issue is self-managed. Based on its financial track record, even this price is aggressive. The counter has marked irregular trades with no quotes for more than a month now. 

ABOUT COMPANY:
Samor Reality Ltd. (SRL) is an integrated construction and real estate development company, focused primarily on the construction and development of residential and commercial projects, in and around Ahmedabad, Gujarat. The company believes that it has established a successful track record in the real estate industry in Ahmedabad, Gujarat by developing versatile projects through a focus on innovative architecture, strong project execution, and quality construction. The company is marketing its projects under the brand name "Samor". SRL is also engaged in the trading of building and construction materials like TMT Bars, HR Sheets, etc. As of September 30, 2022, it has 8 employees on its payroll.

ISSUE DETAILS:
To part finance its need for working capital (Rs. 6.40 cr.), repayment/prepayment of secured loans (Rs. 5.38 cr.), and general corporate purpose (Rs. 4.01 cr.), SRL is coming out with a Right Issue (RI) of 6450000 equity shares of Rs. 10 each a fixed price of Rs. 25 per share to mobilize Rs. 16.13 cr. It is offering 3 shares for every 2 shares held to eligible shareholders as of the record date of November 11, 2022. The issue opens for subscription on December 12, 2022, and will close on December 30, 2022. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE SME. SRL is spending Rs. 0.34 cr. 

This issue is self-managed by the company and KFin Technologies Ltd. is the registrar of the issue. 

Post RI, SRL's current paid-up equity capital of Rs. 4.30 cr. will stand enhanced to Rs. 10.75 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 26.88 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, SRL has posted turnover/net profit - (loss) of Rs. 1.07 cr. / Rs. - (0.09) cr. (FY20), Rs. 9.64 cr. / Rs. 0.11 cr. (FY21), and Rs. 17.38 cr. / Rs. 0.11 cr. (FY22). 

As per the unaudited results filed with the exchange, SRL earned a net profit of Rs. 0.13 cr. on a turnover of Rs. 11.35 cr. 

DIVIDEND POLICY:
The company has no dividend track record. It may adopt a prudent dividend policy post-listing of RIs, based on its financial performance and future prospects.  

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 543376 (FV Rs. 10).
Though this counter turned ex-right on November 11, 2022, it has posted no trades since 4th November 2022. It last closed at Rs. 50.70 on November 03, 2022. The scrip has marked the last 52 weeks' high/low of Rs. 88.70 / Rs. 38.00. The only noteworthy matter is the promoter's holding rising to 56.77% for Sept. 22 quarter from 53.37% for the previous two quarters. It appears that with a very thin volume, the counter has seen erratic price movements.


Conclusion / Investment Strategy

This scrip has marked no trading activities since November 04, 2022, which is the most surprising part. Based on its financial performance, the scrip is priced aggressively. The counter marked some erratic movements till November 04, 2022. There is no harm in skipping this RI offer in view of no trades for more than a month now.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 8, 2022

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

More Samor Reality Ltd RI Views / Analysis / Recommendations ...

The Samor Reality Rights Issue 2022 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Samor Reality Rights Issue 2022 worth investing. The Samor Reality Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Samor Reality Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Samor Reality Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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