Share India RI review - (Apply)

•    SISL is in the business of broking and offering a variety of financial products. 
•    It has posted growth in its top and bottom line for the reported periods. 
•    The company is offering detachable warrants entitling shares at the RI price till 18 months on exercise. 
•    The RI is at a discount of around 33.62% to its last traded price of Rs. 1054.55.

PREFACE:
SISL came with its maiden SME IPO worth Rs. 26.37 cr. in September 2017 at a price of Rs. 41 per share and has given bumper yields so far to investors. It has posted growth in its financial performance and is now offering RI at a discount of 33.62% on the basis of its last traded price of Rs. 1054.55 as of March 06, 2023. This RI is having a novel instrument i.e. detachable warrant that entitles RI applicants to get a share at the RI price till the end of 18 months of allotment and is now asking just 25% money for these warrants and the rest is payable on exercise. The counter is witnessing fancy as it is operators driven.  

However, it's worth noting that the maiden IPO had a mandate to Hem securities and this RI has a mandate with Corporate Professionals as lead managers. 

ABOUT COMPANY:
Share India Securities Ltd. (SISL) was originally incorporated as FMS Securities Ltd. and post-merger with Share India Securities Ltd. under the scheme of amalgamation, it marked its new look. This company went public in 2017 with its SME IPO for BSE SME listing and after migration to the mainboard in September 2020, it is now listed on BSE and NSE. 

Over the years, SISL diversified its products and services through a mix of strategic transactions of forming new wholly owned subsidiaries, and the acquisition of a few companies engaged in the similar business. Currently, it has 10 subsidiaries under its fold. 

SISL is a growing FinTech conglomerate focusing on low latency platform and AI/ML driven trading strategy solution provider to empower its proprietary and professional traders clientele with improvised technology. With a wide range of financial products and services and a client base of retail investors, high net worth individuals and institutional investors, it has diversified and tech-driven financial services derivates trading company. The company, along with its subsidiaries provide a wide array of financial services to clients. Its standalone business includes broking services comprising trading in equities, equity derivatives, commodities, currency derivatives, etc. It is a member of BSE, NSE, MCX, NCDEX and ICEX. It is also providing depository services.

ISSUE DETAILS:
The company is coming out with a rights issue of 638131 equity shares of Rs. 10 each at a fixed price of Rs. 700 per share along with 10848227 detachable warrants (17 detachable warrants for every 1 right share offered) having a price of Rs. 700 per detachable warrant and thus the overall issue size is Rs. 804.05 cr. The company is offering RI in the ratio of 1 share for every 50 shares held to eligible stakeholders as of the record date of February 28, 2023. The issue opens for subscription on March 09, 2023, and will close on March 17, 2023. While the company is asking the full amount of Rs. 700 per share on the application for the number of shares applied, it has called for Rs. 175 per detachable warrant applied and the balance of Rs. 525 is to be paid at the time of exercising the warrant. 

The warrants have a tenure of 18 months and the shareholders will have the option to exercise the option after the completion of 1 month from the date of allotment of the warrant till the completion of 18 months. 

The company is spending Rs. 2.42 cr. for the RI process and from the net proceeds, it will utilize Rs. 761.55 cr. for margin deposits with various stock exchanges for enhancing permissible limits for its clients and Rs. 40.08 cr. for general corporate purposes. 

Corporate Professionals Capital Pvt. Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue. 

Post RI, SIL's current paid-up equity capital of Rs. 31.91 cr. will stand enhanced to Rs. 32.54 cr. and post-exercise of warrants in full, it will stand enhanced to Rs. 43.39 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2278.13 cr. (pre-warrant exercise) and Rs. 3037.51 cr. (on post-warrant exercise) basis.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 453.81 cr. / Rs. 80.69 cr. (FY21) and Rs. 871.01 cr. / Rs. 201.80 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 223.78 cr. on a turnover of Rs. 756.06 cr. Thus the company has posted growth in its top and bottom lines for the reported periods. 

DIVIDEND POLICY:
The offer document is silent on the company's dividend policy. As per BSE Web data, it has been a dividend-paying company and has paid a dividend of 52.5% for FY21 and a 40% interim dividend for FY22. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 540725 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 1202.65 on February 27, 2023, and opened on an ex-right basis at Rs. 1084.95 on February 28, 2023. Since then, it has marked a high/low of Rs. 1084.95 / Rs. 986.45. The scrip last closed at Rs. 1054.55 as of March 06, 2023. For the last 52 weeks, it has posted a high/low of Rs. 1306.85 / Rs. 894.86. The promoters' holding has been constant at 53.01% for the last three quarters ended on December 31, 2022. The counter is well-managed above the RI price to lure investors.