• SPPL is in real estate development, a highly competitive and fragmented segment.
• It has posted listless financial performance so far.
• Promoter's holding of 75% is the only plus point.
• There is no harm in skipping this "High Risk/Low Return" RI offer.
ABOUT COMPANY:
Shraddha Prime Projects Ltd. (SPPL) - (erstwhile known as Towa Sokki Ltd.) - was originally incorporated as a Public Limited Company on March 10, 1993, under the provisions of the erstwhile Companies Act, 1956 in the name and style as "Towa Sokki Limited". It obtained the Certificate of Commencement of Business on March 19, 1993, by the Registrar of Companies, Gujarat, Dadra & Nagar Haveli.
Subsequently, the equity shares of the company were listed on BSE Limited on June 3, 1996. Prior to the year 2021, it was engaged in the business of electrical equipments. In 2021, the company was taken over by the new management (Shraddha Group).
Now under the new name and style, it is an integrated construction and real estate development company, primarily focused on the construction and development of residential and commercial projects, in and around Mumbai, Maharashtra. The brand 'Shraddha Group' have established a successful track record in the real estate industry in Mumbai and Pune by developing real estate projects through its focus on innovative architecture, strong project execution and quality construction.
As of the date of this Letter of Offer, it had 8 ongoing and planned projects. The company expects to launch most of these projects in the market over the next three to five years. Its ongoing and planned projects are in locations that generally provide greater cash flow visibility.
As of the date of this Letter of Offer, the company had four permanent employees including key managerial persons. Its manpower requirement is fulfilled under contractual arrangements with third parties on a need basis. It is silent on the exact data of human resources.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 16625020 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share to mobilize Rs. 49.88 cr. The issue has already opened for subscription on July 10, 2023, and will close on July 24, 2023. The company is offering RI in the ratio of 365 for 100 shares held as of the record date of July 02, 2023, by eligible stakeholders. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE. SPPL is spending Rs. 0.50 cr. for this RI process and from the net proceeds it will utilize Rs. 38 cr. for repayment of secured/unsecured loans, and Rs. 11.38 cr. for general corporate purposes.
The issue is self-managed by the company and RCMC Share Registry Pvt. Ltd. is the registrar of the issue.
Post RI, SPPL's current paid-up equity capital of Rs. 4.55 cr. will stand enhanced to Rs.21.18 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 63.54 cr. The surge in the equity capital of over 4 times may post servicing issues.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a turnover/net profit - (loss) of Rs. 0.10 cr. / Rs. - (0.25) cr. (FY21), Rs. 0.13 cr. / Rs. - (0.31) cr. (FY22), and Rs. 8.62 cr. / Rs. 0.62 cr. (FY23). Thus its financial performance so far has been listless and not matching the asking price.
DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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: 531771 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 30.04 on June 28, 2023, and opened on an ex-right basis at Rs. 31.54 on July 03, 2023. Since then, it has marked a high/low of Rs. 42.66/ Rs. 31.54. The scrip last closed at Rs. 36.67 as of July 12, 2023. For the last 52 weeks, it has posted a high/low of Rs. 42.66 / Rs. 15.25. Thus the counter is well operated by vested interests above the RI price to lure investors.
The promoters' holding has been constant at 75% for the last three quarters ended on March 31, 2023. This counter is currently under ESM - Stage 1.
Review By Dilip Davda on July 13, 2023
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
