Shri Niwas Leasing RI review - (Avoid)

•    The company is engaged in the business of financing and related services as an RBI registered NBFC.
•    It posted minuscule financial performances so far.
•    Post-RI 11 times higher equity raises concern over its servicing going forward.
•    The promoter’s holding is just 1.94% and the counter is manipulated by vested interests.
•    Simply skip this highly risky bet even though its at par. 

PREFACE:
This company is coming out with its RI that is opening on March 06, 2025, but its offer letter was made available on designated exchange only on the previous eve i.e., on March 05, 2025. The Offer letter is dated February 20, 2025. Why it took so long time for making it public is a million-dollar question and the related parties and regulators are answerable for the same. Will they??? This amounts to seer violation of regulations and deliberation behind doing so. The counter is currently under GSM: Sage 4 and has no trades since February 25, 2025. How permission is granted for its RI by designated exchange is a big surprise.

ABOUT COMPANY:
Shri Niwas Leasing & Finance Ltd., (SNLFL) is a non-deposit taking Non-Banking Financial Company (NBFC) registered with RBI to carry on the NBFI (Non-Bank Financial Institution) activities under Section 45IA of the Reserve Bank of India Act, 1934 bearing Registration no. 14.00808 dated May 20, 1998. The Company is engaged in the business of providing short term and long-term funds working capital loans, loan against property, personal loans to customers depending upon their needs and requirements and Investment in securities of potential business. The Company utilizes structured finance products to provide cost-effective forms of financing that would not otherwise be readily available to clients, with an emphasis on providing long- term finance and trading solutions. The company has a wide Range of Products catering to different segments and meeting varied requirements of the customers.

The main object of the Company is to carry on the business of providing, short term and long-term finance, loans to individuals, firms, companies, for the purpose of personal use or commercial use on such terms and conditions which may be beneficial to the company upon such terms and subject to conditions as may seem expedient and particularly to carry on the business as financiers and to acquire by purchase, subscribe, invest in any share, bonds, stocks in India or elsewhere. The offer document is silent on its employees’ strength.

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 39970000 equity shares of Rs. 10 each at par value to mobilize Rs. 39.97 cr. The RI is opening for subscription on March 06, 2025, and will close on March 20, 2025. The company is offering RI in the ratio of 10 for 1 to its eligible stakeholders as of the record date of February 27, 2025. The company is asking for 50% i.e., Rs. 5 per share on application for the number of shares applied. The balance is to be paid in one or more calls as determined by the company from time to time. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.60 cr. for this RI process, and from the net proceeds, it will utilize Rs. 36.97 cr. for augmenting capital base, and Rs. 2.40 cr. for general corporate purposes.  

The RI is self-managed by the company itself, and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 4.00 cr. will stand enhanced to Rs. 43.97 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 43.97 cr. Post RI, company’s paid-up equity jumps to 11 times.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total income/net profit/ - (loss) of Rs. 0.29 cr. / Rs. 0.0.13 cr. (FY22), Rs. 0.35 cr. / Rs. – (0.01) cr. (FY23), Rs. 0.47 cr. / Rs. – (1.38) cr. (FY24). For H1 of FY25 ended on September 30, 2024, it posted a net profit of Rs. 0.09 cr. on a total revenue of Rs. 0.29 cr. Thus, the company has posted minuscule operations.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. The offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 538897 (FV Rs. 10)
The scrip last closed on cum-right basis at Rs. NA on February 26, 2025, and opened on an ex-right basis at Rs. NA on February 27, 2025. Since then, it has marked a high/low of Rs. NA / Rs. NA. The scrip last closed at Rs. 17.66 as of February 24, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 22.26 / Rs. 15.24. The counter is currently under GSM: Stage 3 and its trading is restricted on account of GSM.

The promoters’ holding has been constant at 1.94% for the last quarter ended with December 31, 2024. To a great surprise, the counter is having very thin trades. Thus, the counter appears highly manipulated.