Vaxfab Enterprises RI review - (Avoid)

•    VEL is in the business of trading in Agri products and textile materials. 
•    Based on its recent financial data, the issue is aggressively priced. 
•    The promoters' holding is below 1% and is a big alert.
•    Six-fold jump in paid-up equity capital may face servicing issues. 
•    There is no harm in ignoring this pricey RI.

ABOUT COMPANY:
Vaxfab Enterprises Ltd. (VEL) - (erstwhile known as Ellora Trading Ltd.) is primarily in the business of trading Agriculture Products and has recently commenced its operations in the segment of trading Textile Products and Clothing. The offer document is silent on its human resources data. 

ISSUE DETAILS:
The company is offering a rights issue (RI) of 7200000 equity shares of Rs. 10 each at a fixed price of Rs. 18 per share to mobilize Rs. 12.96 cr. VEL is issuing 6 shares against 1 share held by the eligible shareholders as of the record date of January 03, 2023. The issue opens for subscription on January 18, 2023, and will close on February 01, 2023. The full money is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE and CSE (Calcutta Stock Exchange). The company is spending Rs. 0.40 cr. for this RI, and from the net proceeds, it will utilize Rs. 11.34 cr. for working capital, and Rs. 1.22 cr. for general corporate purposes. 

This RI is self-managed by the company and Cameo Corporate Services Ltd. is the registrar of the issue. 

Post-RI, VEL's current paid-up equity capital of Rs. 1.20 cr. will stand enhanced to Rs. 8.40 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 15.12 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, VEL posted a total revenue/net profit (loss) of Rs. 1.20 cr. / Rs. - (0.01) cr. (FY21), and Rs. 0.37 cr. / Rs. 0.01 cr. (FY22). As per BSE filings, for 3Qs of FY23, it posted a net profit of Rs. 0.11 cr. on total revenue of Rs. 2.42 cr.

Thus the company's financial data has inconsistency in its top and bottom lines. 3Qs of FY23 appear to be window-dressed data. 

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. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 542803 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 43.45 on January 02, 2023, and opened at Rs. 22.70 on an ex-right basis on January 03, 2023. Since then, it marked a high/low of Rs. 32.95 /Rs. 22.70. The scrip last closed at Rs. 32.95 on January 16, 2023 (till writing this review). The scrip has posted the last 52 weeks' high/low of Rs. 32.95 / Rs. 8.14. The counter is well managed with a thin volume above the RI price. The promoter's shareholding declined from 25.77% as of March 31, 2022 quarter to 0.78% as of September 30, 2022 quarter which is a major concern. Currently, the counter is under ASM ST: Stage 1., but it is being rigged to lure investors for subscribing to RI.