• 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.
PREFACE:
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.
ABOUT COMPANY:
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.
ISSUE DETAILS:
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.
FINANCIAL PERFORMANCE:
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.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE:539659
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%.
DIVIDEND POLICY:
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.
Review By Dilip Davda on January 31, 2022
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
