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• SSSL is engaged in bulk vessel segment and agricultural products trading.
• It marked inconsistency in its financial performance.
• The offer document is missing clarity on its vessel's operation capacity.
• It has just 7 employees as of the date of filing this offer document.
• There is no harm in skipping this "High Risk / Low Return" bet.
ABOUT COMPANY:
Seacoast Shipping Services Ltd. (SSSL) -erstwhile known as Mahaan Impex Ltd. - is focusing on the all-size dry bulk vessels segments such as Handy vessel (5000-40000 MT), Supramax (40000-55000MT), Ultramax (60000-70000MT), Panamax (70000-80000 MT) wherein Supramax &Ultramax vessels are considered to be the most versatile amongst the various dry bulk ship types due to both their size and specifications. Seacoast provides transportation solutions to a diverse group of customers, including miners, producers, traders, and end users. Typical cargoes carried include both major bulk cargoes (coal, grain, and iron ore) and minor bulk (fertilizer, steel products, pet coke, cement, forest products, and more). The company offers various services starting with dry bulk into various areas such as chartering, hiring of vessels, operations, etc., and developing business by entering into aggregates business in Bangladesh and handling Persian Gulf cargos, South Asian coal from Indonesia etc.
Presently, SSSL engages in the trading of agricultural commodities. The company deals in products such as wheat, rice, tomatoes, onions, chana dal, masur dal and various other products. Recognizing the prevailing economic uncertainties and the potential risks associated with the shipping industry the company has strategically shifted its focus towards agricultural trading. This move has proven to be highly profitable and has positioned us as a key player in the agricultural market.
While the company is talking big on its shipping logistics services, the offer document is silent on its vessels and overall capacity data. As of the filing of this offer document, it had just 7 employees on its payroll. It appears that the company is doing its business on third-party sources.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 202005000 equity shares of Re. 1 each at a fixed price of Rs. 2.40 per share to mobilize Rs.48.48 cr. The issue opens for subscription on July 21, 2023, and will close on August 02, 2023. SSSL is offering RI in the ratio of 3 shares for every 5 shares held by the eligible stakeholders as of the record date of July 13, 2023. The full amount is to be paid along with the application for the number of shares applied. It is spending Rs. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 36.74 cr. for working capital, and Rs. 11.24 cr. for general corporate purposes.
The issue is self-managed and Swaraj Shares and Securities Pvt. Ltd. is the advisor to the RI. KFin Technologies Ltd. is the registrar of the issue and MCD Share Transfer Agent Ltd. is the registrar of the company.
Post-RI, SSSL's current paid-up equity capital of Rs. 33.67 cr. will stand enhanced to Rs. 53.87 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 129.28 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, SSSL has posted a total revenue/net profit of Rs. 243.23 cr. / Rs. 10.56 cr. (FY21), Rs. 127.81 cr. / Rs. 3.39 cr. (FY22), and Rs. 429.62 cr. / Rs. 14.38 cr. It suffered a major setback for FY22 following general trends in the market on account of the pandemic. Its financial performance also raises eyebrows and concern over the sustainability going forward as it is operating in a highly competitive and fragmented segment.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. (However, as per the BSE Website, it paid a dividend of Rs. 0.50 per share (FV of Rs. 10) in July 2021. In November 2021, it split its shares from Rs. 10 to Re. 1).
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 542753 (FV Re.1).
The scrip last closed on cum-right basis at Rs. 4.15 on July 12, 2023, and opened on an ex-right basis at Rs. 3.32 on July 13, 2023. Since then, it has marked a high/low of Rs. 4.23 / Rs. 3.32. The scrip last closed at Rs. 3.95 as of July 20, 2023. For the last 52 weeks, it has posted a high/low of Rs. 5.20 / Rs. 1.73. The counter is under ESM Stage-1, at present.
The promoters' holding has declined to 44.55% as of March 31, 2023, compared to 52.88% as of December 31, 2022.
The counter is well-managed above the RI price to lure investors.
Review By Dilip Davda on July 20, 2023
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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About 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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Seacoast Shipping Rights Issue 2023 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 Seacoast Shipping Rights Issue 2023 worth investing. The Seacoast Shipping Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Seacoast Shipping Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Seacoast Shipping Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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Thanks in advance
Dinesh