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Veer Global BSE SME RI review (Avoid)

Veer Global Infraconstruction Limited Logo

•    VGIL is a small player in the real estate segment for affordable housing.
•    Its financial performance is not in line with its asking price as well as market price.
•    The issue is aggressively priced and to lure investors, it appears that it is managing the market operations. 
•    There is no harm in skipping this costly offer. 

ABOUT COMPANY:
Veer Global Infraconstruction Ltd. (VGIL) is a real estate developer, primarily focusing on the development of residential projects in Vasai- Virar and Palghar districts. It has over 10 years of experience in, developing residential projects in the low-income affordable housing segment. VGIL's projects primarily cater to affordable housing where it tries to bring reality to the dreams of people for owning their own place to live. The company achieves this by creative pricing and flexible payment terms ranges within the low-income affordable housing market segment.

ISSUE DETAILS:
To part finance its needs for funds for incremental working capital (Rs. 3.50 cr.) and general corporate purpose (Rs. 1.21 cr.), VGIL is coming out with a Rights Issue (RI) of 812000 equity shares of Rs. 10 each at a fixed price of Rs. 60 per share to mobilize Rs. 4.87 cr. The company is offering 1 right share against 8 shares held as of the record date on January 21, 2022. The issue opens for subscription on January 31, 2022, and will close on February 14, 2022. Post allotment, shares will be listed on BSE SME. Its maiden IPO came in Sept/Oct. 2020 at Rs. 28 per share. At that time the lead manager was CapitalSquare Advisors Pvt. Ltd. For this issue, it has changed its lead manager. VGIL is spending Rs. 0.16 cr. for this RI process. The minimum application lot for this RI is 125 shares and in multiples thereon, thereafter.

The issue is solely lead managed by Navigant Corporate Advisors Ltd. and Purva Shareregistry (India) Pvt. Ltd. Post RI, VGIL's current paid-up equity capital of Rs. 6.50 cr. will stand enhanced to Rs. 7.31 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 43.86 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, VGIL has (on a consolidated basis) posted revenue/net profits of Rs. 8.51 cr. / Rs. 0.19 cr. (FY20) and Rs. 13.00 cr. / Rs. 0.19 cr. (FY21). For H1 of FY22 ended on September 30, 2021, it has (on a standalone basis) earned a net profit of Rs. 0.22 cr. on a revenue of Rs. 3.11 cr. For the previous two fiscals, its standalone net profit stood at Rs. 0.22 cr. (FY20) and Rs. 0.27 cr. (FY21). Thus its financial performance is on a minuscule basis and is not matching the asking price. As of September 30, 2021, the promoter's holding was 66.08%.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE:543241
The scrip closed on cum-rights basis at Rs. 221..00 as of January 19, 2022, and opened on an ex-rights basis at Rs. 200.00 on January 20, 2022. Since then it has posted a high/low of Rs. 200.00 /Rs. 167.40. For the last 52 weeks, it has marked a high/low of Rs. 219.55/ Rs. 30.10. It last closed at Rs. 175.00 as of January 28, 2022, and based on this closing, its market cap amounts to Rs. 127.92 cr. It appears that the counter is well operated by vested interest parties. The counter is currently under ASM LT - Stage 1 which also raises concern.

DIVIDEND POLICY:
The company paid has not paid any dividend since listing in October 2020.  It will follow a prudent dividend policy based on its financial performance and future prospects. 


Conclusion / Investment Strategy

VGIL’s asking price and market prices are not in line with its financial performances so far. It came with a maiden IPO at Rs. 28 and now asking Rs. 60 with a well-managed counter with a manipulated price. The counter is currently under ASM LT – Stage 1 which also raises concern. There is no harm in skipping this costly bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jan 29, 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. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

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

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