Varanium Cloud RI review - (May apply)

•    VCL is engaged in providing services surrounding digital audio and video-based streaming services in the B2B segment.
•    It surprised investors across the board with its bumper performance for FY23.
•    The scrip witnessed a wild swing both ways in the last one year. 
•    Well-informed investors may park funds for medium to long-term rewards. 

ABOUT COMPANY:
Varanium Cloud Ltd. (VCL) is a fast-growing Indian technology company that is focused on providing services surrounding digital audio and video-based streaming services.

The Company operates in the following key verticals:

● Provision of digital audio and video content streaming services to various content owners and telecom operators in India and internationally on a SaaS (Software as A Service) model such as Voice and Video over Internet Protocol solutions (VoIP) in the B2B and B2C segments;

● Transforming the BPO and KPO industry by providing services strategically based in Tier 2 cities, harnessing cost advantages and skilled workforce availability.

● Provision of low bandwidth digital education content platforms (EdTech) with complete Learning Management Systems (LMS) focused on non-urban areas under the Edmission brand;

● Provision of information technology-related services to startups and SMEs to help them transition their business to digital platforms and manage the relevant infrastructure on an IaaS (Infrastructure as A Service) model;

VCL's technology is also completely device agnostic and can be delivered to any mobile device or screen, wired or wireless, agnostic of the operating system or type of screen.

Customers of the company range from business owners, telecom providers, and education institutions to end consumers in some cases. For its phy-gital educational platform 'Edmission', customers include educational institutions - private and government organizations. Jump Talk customers include resellers of mobile services as well as end consumers who wish to avail of international calling facilities to India. 

Its offering of Infrastructure as a Service, payment facilitation services, and e-commerce as a service, are all B2B (business to business) in nature and comprise small to large businesses across industries that want to avail of services to enhance their offering to the end consumers. The marketing and Customer Acquisition process is a mix of offline and digital media along with a focused direct sale approach, largely for B2B services. As of June 30, 2023, it had 83 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 4020574 equity shares of Rs. 5 each at a fixed price of Rs. 123 per share to mobilize Rs. 49.46 cr. The issue has already opened for subscription on September 28, 2023, and will close on October 06, 2023. The company is offering RI in the ratio of 1 for 10 to eligible stakeholders as of the record date of September 15, 2023. The company is asking for Rs. 61.50 (including a premium of Rs. 59) per share on application and the balance to be paid by one or more subsequent calls within three months. Post allotment, shares will be listed on NSE. VCL is spending Rs. 1.00 cr. for this RI process and from the net proceeds, it will utilize Rs. 36.37 cr. for working capital, and Rs. 12.09 cr. for general corporate purposes.

The issue is self-managed by the company itself and Bigshare Services Pvt. Ltd. is the registrar of the issue. 

Post-RI VCL's current paid-up equity capital of Rs. 20.10 cr. will stand enhanced to Rs. 22.11 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 543.98 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total revenue/net profit of Rs. 35.35 cr. / Rs. 8.40 cr. (FY22), and Rs. 383.37 cr. / Rs. 85.46 cr. (FY23). The quantum jump in its top and bottom line has surprised all across the board. 

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It will adopt a prudent dividend policy post listings of RI shares, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: CLOUD (FV Rs. 5).
The scrip last closed on cum-right basis at Rs. 159.20 on September 14, 2023, and opened on an ex-right basis at Rs. 160.50 on September 15, 2023. Since then, it has marked a high/low of Rs. 166.00 / Rs. 142.35. The scrip last closed at Rs. 144.00 as of September 28, 2023. For the last 52 weeks, it has posted a high/low of Rs. 1602.40 / Rs. 129.15. 

The promoters' holding has been at 63.19% for the quarters ended on June 30, 2023. The counter is well managed above the RI pricing to lure investors.