Vidli Restaurant BSE SME RI review (May apply)

Vidli Restaurants Limited Logo

•    VRL is a well-known brand in the hospitality business. 
•    It has revamped its business model with innovative ideas.
•    It has also launched ready to eat food products and namkeens.
•    It has failed to mark impressive performance in the last five years. 
•    Risk seeker, cash surplus investors may consider parking of funds for the long term.

VRL came with its at par maiden IPO in February 2016. At that time the lead manager was Pantomath Capital Advisors Pvt. Ltd. and now for this at par RI, it has appointed CapitaSquare Advisors Pvt. Ltd. After struggles, the company is now perhaps on a fast forward mode with many innovative business ideas and product launch. Post this RI, it will reduce its mainboard migration timeframe. 

Vidli Restaurants Ltd. (VRL) is in the business of hospitality, food products and allied activities. Its business model includes grant of the franchisee under Trade Marks - "Vithal Kamats/Kamats", "Urban Dhaba - The rich Taste of Punjab", "Pepper Fry Veg Multi-Cuisine Kitchen by Kamats", "Waah Malvan". As of March 31, 2021, there were 35 Franchise outlets in operations under Trade Mark "Vithal Kamats/Kamats", 2 franchise outlets under "Urban Dhaba" and 1 outlet under "Pepper Fry Veg Multi-Cuisine Kitchen by Kamats", and 1 franchise under "Waah Malvan" brand. 

The company has built an outlet of "Multi-Brand Cloud Kitchen" with the concept of only delivery or takeaways and no actual storefront or high street locations requirement. It has also ventured into the production of ready to eat food products, a variety of namkeens like Mini Bhakarvadi, Methi Gathiya, Kabuli chana, Tikha Boondi etc. These products are available at the restaurants of the company and are also distributed through wholesalers, retail shops, sweet marts etc. 

VRL came with its maiden IPO in February 2016 at par to mobilize Rs. 1.31 cr. and now after almost six years, it is coming with the RI at par.  

To part finance its needs for acquiring 84.01% stake in Vitizen Hotels Ltd., (Rs. 4.09 cr.), working capital (Rs. 0.81 cr.) and general corporate purpose (Rs. 1.30 cr.), VRL is offering rights issue (RI) in the ratio of 3 shares for every 2 shares held as on the record date of January 21, 2022. The company mulls mobilizing Rs. 6.50 cr. with this at par RI of 6495000 equity shares. The issue opens for subscription on February 02, 2022, and will close on February 16, 2022. Minimum application is to be made for 500 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Rs. 5 per share to be paid on application and the balance will be payable on one or more subsequent calls by the company. VRL is spending Rs. 0.30 cr. for this RI process. 

The issue is solely lead managed by CapitalSquare Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrars to the issue. 

Post RI, VRL's current paid-up equity capital of Rs. 4.33 cr. (4330000 shares) will stand enhanced to Rs. 10.83 cr. (10825000 shares). Based on a price of RI, the company is looking for a market cap of Rs. 10.83 cr. 

On the financial performance front, for the last two fiscals, VRL has posted a total turnover/net profit of Rs. 4.92 cr. / Rs. 0.16 cr. (FY20) and Rs. 3.02 cr. / Rs. 0.05 cr. (FAY21). For the six months of FY22 ended on September 30, 2021, it posted a loss of Rs. - (0.01) cr. on a turnover of Rs. 1.51 cr. 

As of September 30, 2021, its NAV stood at Rs. 12.43.

The scrip last closed at Rs. 42.20 on cum-right basis on January 19, 2022, and opened on the ex-rights basis at Rs. 23.95 on January 24, 2022. Since then, it has marked a high/low of Rs. 28.95 / Rs. 23.95. For the last 52 weeks, it has posted a high/low of Rs. 28.95 / Rs. 5.22. It last closed at Rs. 28.95 on January 31, 2022. It is currently under ASM LT - Stage 1. Based on its last closing price, the market cap stands at Rs. 31.34 (on ex-rights basis). As of September 30, 2021, the promoter's holding was 63.23%. 

 The company paid a dividend of 2.5% for FY16 and 5% for FY17 and has skipped dividends thereafter. It will adopt a prudent dividend policy based on its financial performance and future prospects.

Conclusion / Investment Strategy

Post listing after maiden IPO, the company has seen many ups and downs and despite all odds and struggles, it sustained slow but steady growth till pandemic. Though it suffered a minor setback during pandemic periods, it is now on a fast forward mode with many innovative ideas and product launches. Cash surplus, risk seeker investors may consider investing in this at par RI with a long term perspective.

Review By Dilip Davda on Jan 31, 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 Vidli Restaurants Limited RI Views / Analysis / Recommendations ...

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