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Veer Global Infra RI review (May apply)

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•    VGIL is coming to market for the third time to raise its equity base.
•    The issue price kept spiralling high issue after issue. 
•    Its financial track records are not in line with the asking price. 
•    Well-informed investors may consider parking funds.

This is the 2nd Rights Issue (RI) from this company after going public in October 2020. It came with the maiden IPO at a price of Rs. 28 per share to mobilize Rs. 4.92 cr. It came with its first RI in January 2022 at a price of Rs.60.00 per share to mobilize Rs. 4.87 cr. and now it is offering 2nd RI at a price of Rs. 130.00 per share to mobilize Rs. 10.56 cr. Surprisingly both RIs are for 812000 shares but the issue price kept more than double.

Veer Global Infraconstruction Ltd. (VGIL) is the construction of residential and commercial projects. It is primarily focusing on the development of residential projects in the Vasai- Virar and Palghar districts. The company has over 10 years of experience in, developing residential projects in the low-income affordable housing segment. Its projects primarily cater to affordable housing where VGIL tries to bring reality to the dreams of people of owning their own place to live. The company achieves this through creative pricing and flexible payment terms ranges within the low-income affordable housing market segment.

The company is coming out with a rights issue (RI) of 812000 equity shares of Rs. 10 each at a fixed price of Rs.130.00 per share to mobilize Rs. 10.56 cr. The company is offering RI in the ratio of 1 for 9 shares held by the eligible stakeholders as of the record date of February 10, 2023. The issue opens for subscription on February 24, 2023, and will close on March 10, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. VGIL is spending Rs. 0.20 cr. for this RI process and the net proceeds will be utilized for Rs. 7.72 cr. for working capital and Rs. 2.64 cr. for general corporate purposes.

Navigant Corporate Advisors Ltd. is the sole lead manager and Purva Sharegistry India Pvt. Ltd. is the registrar of the issue. 

Post-RI, VGIL's current paid-up equity capital of Rs. 7.31 cr. will stand enhanced to Rs. 8.12 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 105.58 cr. 

On the financial performance front, the company has posted a turnover/net profit of Rs. 13.00 cr. / Rs. 0.21 cr. (FY21), and Rs. 7.82 cr. / Rs. 0.39 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 0.23 cr. on a turnover of Rs. 2.92 cr. Thus, it has marked declining trends for the top line while the little surge in its bottom lines for the reported periods. 

The offer document is silent on the company's dividend policy. As per BSE Web, it has declared a 2% dividend for FY22 and paid it in October 2022.  It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 184.00 on February 09, 2023, and opened on an ex-right basis at Rs. 180.00 on February 10, 2023. Since then, it has marked a high/low of Rs. 221.95 / Rs. 180.00.  The scrip last closed at Rs. 214.00 as of February 23, 2023. For the last 52 weeks, it has posted a high/low of Rs. 234.01 / Rs. 107.78. The promoters' holding has seen ups and down for the last three quarters. It was 66.08% for Sept. 21 Q, rose to 70.26% for March 22 Q and declined to 69.98% for Sept. 22 Q.

The counter is well managed above the par value to lure investors. The counter is currently under ASM LT Stage-1. As indicated on BSE Web, the market lot for this RI will be 50 shares.

Conclusion / Investment Strategy

The company has been raising fresh capital from the market with rising issue prices. Since October 20 this is the third primary offer from the company. Though the RI is at a discount of around 39% to its last traded price, well-informed investors may consider parking funds as its financial performance is not matching the asking price.

Review By Dilip Davda on February 23, 2023

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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: ).

More Veer Global Infraconstruction Limited RI Views / Analysis / Recommendations ...

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