Vishvprabha Ventures RI review (Avoid)

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•    VVL is engaged in the realty sector as a contractor/sub-contractor.
•    Its financial data is not in line with the asking price or prevalent quotes.
•    It appears that the counter is rigged to lure investors for this RI.
•    Being closely held, this counter is under the operator's control.
•    There is no harm in ignoring this RI.

Vishvprabha Ventures Ltd. (VVL) is engaged as a contractor and sub-contracting for undertaking various construction activities services in Dombivili, Thane area. The company looking for expansion of its construction projects from local cities to other cities and states. It engages in contracting and sub-contracting for various projects which includes the construction of commercial structures and industrial structures. It operates from the rented premises and has no own properties. However, its subsidiary Vishvprabha Foods Pvt. Ltd. has some owned property. 

VVL also has plans for expansion of business through its Subsidiary Company which is incorporated under the name style "Vishvprabha & VS Buildcon Private Limited."

As of February 28, 2021, it had 12 employees on its payroll. For the construction, it employs contractual labour, which saves the hassle of dealing with the labour on a day-to-day basis and helps to get labour as per requirement. The company hires contract labourers depending on various factors like the location, size, duration, etc. and have several contractors providing good labour at competitive prices.

To part finance its needs for the general corporate purpose (Rs. 1.09 cr.) VVL is issuing 1470000 equity shares of Rs. 10 each at a fixed price of Rs. 30 per share as a rights issue (RI) to mobilize Rs. 4.41 cr. The company is offering 6 shares for every 1 share held on the record date of December 02, 2021. The issue has already opened for subscription on December 29, 2021, and will close on January 27, 2022. Post allotment, shares will be listed on BSE. VVL will be spending Rs. 0.32 cr. for this RI process. From the net proceeds, the company is using Rs. 3.00 cr. for adjustment of unsecured loans from the promoters. 

The issue is solely lead managed by Fedex Securities Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, VVL's current paid-up equity capital of Rs. 0.25 cr. will stand enhanced to Rs. 1.72 cr. Based on RI pricing, the company is looking for a market cap of Rs. 5.15 cr. 

On the financial performance front, for the last three fiscals, VVL has posted turnover/net profits of Rs. 1.19 cr. / Rs. - (0.001) cr. (FY19), Rs. 2.10 cr. / Rs. 0.09 cr. (FY20), Rs. 0.80 cr. / Rs. 0.07 cr. (FY21). For the first quarter of FY22 ended on June 30, 2021, it has earned a net profit of Rs. 0.04 cr. on a turnover of Rs. 0.31 cr. Thus is has shown inconsistency in its earnings for all these years with minuscule operations. 

For the last three fiscals, it has paid a dividend of 2.5% per year and for the current fiscal, it has not declared any dividend. It will continue with a prudent dividend policy in the coming years. 

The scrip last closed at Rs. 101.40 on cum-right basis on November 30, 2021, and opened at Rs. 42.15 on an ex-rights basis on December 01, 2021. Since then, it has marked high/low of Rs. 96.30 /Rs. 42.15 and its last closing price is Rs. 96.30 as of December 28, 2021. Based on this price, its market cap stands at Rs. 16.52 cr. For the last 52 weeks, it has posted a high/low of Rs. 96.30 / Rs. 13.21. It appears that price rigging is done on the counter to lure investors for this pricy RI.

This is perhaps due to market operations on the counter with thin trades based on a low equity base. The promoters have 57.18% holding at present.

Conclusion / Investment Strategy

The counter is well operated since the planning of RI. This is the best example of market rigging on the counter with a very low equity base and closely held company. Its financial data is not in line with its asking price as well as current ongoing quotes. It will use Rs. 3 cr. from the RI proceeds for promoter’s loan adjustment only which is not productive for new investors. There is no harm in ignoring this RI.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 28, 2021

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. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).

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.

Email: dilip_davda@rediffmail.com

More Vishvprabha Ventures Limited RI Views / Analysis / Recommendations ...

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