Visagar Fin RI review - (Avoid)

•    VFSL is in the business of financial services and investment. 
•    Though the issue is at par value, its financial reports are not encouraging.
•    It has posted losses for the current fiscal so far. 
•    It may face servicing issues for over a five-fold jump in its paid-up capital.
•    There is no harm in ignoring this at par RI that has very low promoter's holding. 

ABOUT COMPANY:
Visagar Financial Services Ltd. (VFSL) - (erstwhile known as Inca Finlease Ltd.) is a Non-Banking Financial Company (NBFC) registered with RBI to carry on the business of NBFC without accepting public deposits under Section 45 IA of the Reserve Bank of India Act, 1934.

The company is a non-deposit-taking Non-Banking Financial Company (NBFC-Non-Systematically Important Non-Deposit Taking Company categorized as Investment and Credit Company i.e. ICC) registered with the RBI. VFSL is primarily engaged in the business of investing in securities of listed and unlisted companies. Its investment strategy depends on the opportunities, and market conditions; both long-term and short-term, and it invests in a variety of sectors. The company generates maximum revenue from the sale of shares. It provides both secured and unsecured loans based on the risk profiles of the clients. The company needs financial resources to fuel the growing demand and to seize the opportunities presented by the market from time to time. As of the filing date of this offer document, it has 7 employees on its payroll.

ISSUE DETAILS:
The company is offering a rights issue (RI) of 497387700 equity shares of Re. 1 each at a par value to mobilize Rs. 49.74 cr. VFSL is issuing 51 shares against 10 shares held by the eligible shareholders as of the record date of December 30, 2022. The issue has already opened for subscription on January 12, 2023, and will close on February 02, 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. The company is spending Rs. 0.50 cr. for this RI, and from the net proceeds, it will utilize Rs. 39.24 cr. for working capital, and Rs. 10.00 cr. for general corporate purposes. 

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

Post-RI, VFSL's current paid-up equity capital of Rs. 9.75 cr. (97527000 shares) will stand enhanced to Rs. 59.49 cr. (594914700 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 59.49 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, VFSL has posted a total income/net profit (loss) of Rs.1.52 cr. / Rs. - (0.28) cr. (FY20), Rs. 66.58 cr. / Rs. - (0.35) cr. (FY21), and Rs. 16.82 cr. / Rs. 0.24 cr. (FY22). 

As per BSE filings, for H1 of FY23, it posted a loss of Rs. - (3.06) cr. on a total income of Rs. 23.31 cr., and for 3Qs of FY23, it reported a loss of Rs. - (2.70) cr. on a total income of Rs. 31.54 cr.

Thus the company's financial data has inconsistency in its top and bottom lines. 

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: 531025 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.46 on December 29, 2022, and opened at Rs. 1.30 on an ex-right basis on December 30, 2022. Since then, it marked a high/low of Rs. 1.49 /Rs. 1.12. The scrip last closed at Rs. 1.16 on January 13, 2023. The scrip has posted the last 52 weeks' high/low of Rs. 3.51 / Rs. 0.61. The counter is well managed with a thin volume. The promoter's shareholding has been constant at 5.34% for the last three quarters ended in September 2022 and is a major concern. The counter is well managed above par value to lure investors.