SPV Global RI review (Apply)

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•    SGTL is in the business of trading in a wide spectrum of metals.
•    It has posted spectacular financial performances so far with tiny equity.
•    A thinly traded counter remains a major concern for investors.
•    Investors can go ahead with this RI offer for handsome rewards.

SPV Global Trading Ltd. (SGTL) which was incorporated as Tariff Cine and Finance Ltd. rechristened to its current name in April 2019. It is currently engaged in the business trading in a wide spectrum of non-ferrous metals like copper which serves the copper alloy manufacturing industry, which in turn serves many industries such as Automobiles, Electricals, Electronics, horological, coinage, etc. SGTL essentially deals in the trading of copper and copper scrap. 

It was in the business of trading in shares and securities and was accordingly registered with the Reserve Bank of India as an NBFC. The registration was voluntarily surrendered and RBI has cancelled the NBFC registration with effect from 02.08.2018. The Company is currently engaged only in the trading of copper scrap and hold certain businesses and assets. Further, it has entered into trading in virgin metals like Copper Cathodes, Zinc Ingots, Nickel Cathodes, Tin Ingots, Storage and logistics of virgin metals and advisory services on hedging on the London Metal Exchange (LME). 

To part finance its needs for working capital (Rs. 1.37 cr.), SGTL is offering 1715000 equity shares as a rights issue (RI) in the ratio of 7 for 1 to the shareholders whose names were registered on the record date of March 22, 2022. SGTL mulls raising Rs. 1.72 cr. The company is issuing these shares at par value.  The issue has already opened for subscription on March 30, 2022, and will close on April 13, 2022. Applicants will have to pay the full amount on the application. Post allotment, shares will be listed on BSE. SGTL is spending Rs. 0.35 cr. for this RI process.

The issue is solely lead managed by Mark Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post RI, SGTL's current paid-up equity capital of Rs. 0.25 cr. (245000 shares) will stand enhanced to Rs. 1.96 cr. (1960000 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 1.96 cr. 

For the last two fiscals, on a consolidated basis, SGTL has posted turnover/net profits of Rs. 458.57 cr. / Rs. 140.02 cr. (FY20) and Rs. 513.57 cr. / Rs. 29.04 cr. (FY21). For the first half of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 10.00 cr. on a turnover of Rs. 255.29 cr. All these data are really surprising considering the tiny equity capital of the company. Can a trading company post such margins? It's a million-dollar question. There is something fishy. 

Surprisingly, despite good profits, SGTL has not declared any dividends for the last five fiscals.  It will adopt a prudent dividend policy based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 13.37 on January 19, 2022, and opened on the ex-rights basis at Rs. 12.50 on March 28, 2022. Since then, it has posted a high/low of Rs. 12.50 / Rs. 12.50. It last closed at Rs. 12.50 (on March 30, 2022) and based on this closing, its market cap post-RI stands at Rs. 2.45 cr. It has posted the last 52 weeks high/low of Rs. 12.50 / Rs. 10.42. It's a thinly traded counter. Its promoter's holding has been 58.37% since last three quarters. 

Conclusion / Investment Strategy

Though its financial data raises eyebrows, this at par offer from a spectacular performer is worth considering for investment for short to long term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Mar 30, 2022

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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).

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.

Email: dilip_davda@rediffmail.com

More SPV Global Trading Limited RI Views / Analysis / Recommendations ...

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