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Sharanam Infra RI review (Avoid)

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•    SITL is in real estate-related activities and trading business. 
•    It has posted minuscule financial performance for the reported periods. 
•    SITL has no promoters' holding, which remains a major concern.
•    Stay away from this at-par issue and save your hard-earned money.

Sharanam Infraproject and Trading Ltd. (SITL) was originally incorporated as Skyhigh Projects Ltd. in 1992 and changed its name to the current one in July 2015. The initial object was to manufacture wristwatch cases and subsequently, it was changed to engage in the business of real estate, in particular purchase and sale/sub-let/ hire purchase etc. of land and or building, showrooms, plantations etc. It will also undertake a supply chain of a variety of products for the construction activities and oil and gas industry. The offer document is silent on its human resources data. 

The company has come out with a Rights Issue (RI) of 75001500 equity shares of Re.1 at par value to mobilize Rs. 7.50 cr. The issue has already opened for subscription on May 31, 2023, and will close on the extended date of June 20, 2023. (Earlier closing date was June 09, 2023). The company is offering RI in the ratio of 3 for 2 to its eligible stakeholders as of the record date of May 22, 2023. The full amount is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process and from the net proceeds, it will utilize Rs. 7.00 cr. for working capital.  

This issue is self-managed by the management itself and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. 

Post RI, SITL's current paid-up equity capital of Rs. 5.00 cr. will stand enhanced to Rs. 12.50 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 12.50 cr. 

On the financial performance front, the company has posted minuscule performance. For FY22 it earned a net profit of Rs.0.02 cr. on a turnover of Rs. 0.18 cr. and for FY23 it had no revenue and incurred a loss of Rs. 0.17 cr. Surprisingly the company has given its projected working for FY23, FY24 and FY25 to lure investors for this at-par issue. (This is a sheer violation of SEBI guidelines on forward-looking statements).

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. 

The scrip last closed on cum-right basis at Rs. 1.10 on May 22, 2023, and opened on an ex-right basis at Rs. 1.10 on May 23, 2023. Since then, it has marked a high/low of Rs. 1.12 / Rs. 1.00. The scrip last closed at Rs. 1.05 as of June 02, 2023. For the last 52 weeks, it has posted a high/low of Rs. 1.66 / Rs. 0.77. There is no promoter's holding in this company, which is very surprising. The counter is well managed above the par value to lure investors. 

Conclusion / Investment Strategy

Though this RI is at par, its minuscule financial performance and poor track record raise eyebrows. No promoter’s holding is also a major concern. Due to poor response, it has extended the RI closure. Simply stay away from this at-par issue and save your hard-earned money.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on June 3, 2023

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 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, a freelance journalist

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: ).

More Sharanam Infraproject and Trading Limited RI Views / Analysis / Recommendations ...

The Sharanam Infraproject & Trading 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 Sharanam Infraproject & Trading Rights Issue 2023 worth investing. The Sharanam Infraproject & Trading Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Sharanam Infraproject & Trading Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Sharanam Infraproject & Trading Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.