Som Datt Finance BSE RI review - (Avoid)

•    The company that was primarily in the business of investments has now diversified into lending.
•    It has posted erratic and inconsistency in its financial performance for the reported periods.
•    Based on its recent financial data, the issue appears exorbitantly priced.
•    There is no harm in skipping this “High Risk/Low Return” pricy bet.

PREFACE:
The company is coming out with its RI to mobilize Rs. 49.04 cr., and is opening for subscription on June 20, 2025, and its offer document is dated June 09, 2025, with a record date of June 06, 2025, but the offer document was not uploaded on the designated exchange till noon of June 19, 2025. Thus, delayed submission of offer documents for RI is unabatedly going on.

ABOUT COMPANY:
Som Datt Finance Corp Ltd. (SDFCL) is a Non-Systematically Important Non-Deposit Company, categorized as an Investment and Credit Company (ICC), and is registered with the Reserve Bank of India (RBI) under Section 45-IA of the RBI Act, 1934. The Company was initially granted a Certificate of Registration by the RBI on March 29, 2005, under Registration No. B.05-02987. This certificate was later updated, and a new Certificate of Registration was issued on September 23, 2021, with Registration No. B-14.03556, allowing the Company to continue operating as a Non-Banking Financial Company (NBFC). This certificate was later further updated, and a new Certificate of Registration was issued on February 27, 2025 with Registration No. N-09.00492 allowing the Company to continue operating as a Non-Banking Financial Company (NBFC). Currently, the Company is primarily engaged in proprietary investments in stocks and securities, with its revenue largely derived from dividends and investment income.

SDFCL’s Business Model, which has predominantly focused on investment activities over the past few years, is now evolving to create a balanced approach between Investment and Lending verticals. This strategic diversification is aimed at building a strong and resilient asset base. As of December 31, 2024, it had just 9 employees on its payroll. It operates in a highly competitive and fragmented segment.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 7005579 equity shares of Rs. 10 each at a fixed price of Rs. 70 per share to mobilize Rs. 49.04 cr. The RI is opening for subscription on June 20, 2025, and will close on July 04, 2025. The company is offering RI in the ratio of 7 for 10 to its eligible stakeholders as of the record date of June 06, 2025. The company is asking for full money on application for number of shares applied. 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. 45.00 cr. for augmenting its capital base, and Rs. 3.44 cr. for general corporate purposes. 

The RI is self-managed by the company itself, and RCMC Share Registry Pvt. Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 10.01 cr. will stand enhanced to Rs. 17.01 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 119.10 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total income/ net profit/ - (loss) of Rs. 5.39 cr. / Rs. 3.84 cr. (FY22), Rs. 1.35 cr. / Rs. 0.72 cr. (FY23), Rs. 15.03 cr. / Rs. 12.10 cr. (FY24).  For 9M of FY25 ended on December 31, 2024, it posted a loss of Rs. – (1.64) cr. on a total income of Rs. 0.71 cr. Thus, it posted inconsistency in its financial performance for the reported periods. It has been served disciplinary action by designated exchange between 2014 – 2019, indicating poor compliances till then.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods. 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: 511571 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 121.05 on June 05, 2025, and opened on an ex-right basis at Rs. 103.60 on June 06, 2025. Since then, it has marked a high/low of Rs. 103.60 / Rs. 82.15. The scrip last closed at Rs. 84.50 as of June 19 2025. For the last 52 weeks’ it has posted a high/low of Rs. 120.72 / Rs. 65.25. 

The promoters’ holding has been constant around 69.36% for the last three quarters ended with March 31, 2025. The counter is well managed above the RI price to lure investors.