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WeP Solutions Rights Issue review (May apply)

WeP Solutions Limited Logo

•    WSL is engaged in managed and retail printing services with digital solutions.
•    It has been posting losses since FY19.
•    This rights issue is at par and hence may be considered from a long term perspective.


ABOUT COMPANY:
WeP Solutions Ltd. (WSL) is in the business of managed printing services, digital services and retail printing services. It was incorporated as Datanet Corporation Ltd., in 2010 it acquired the managed printing services business from WeP Solutions India Ltd., and renamed the company to the current one. In 2012 it acquired the printing business division of WeP Peripherals Ltd. Thus it finally reached to its current status. It currently operates with 112 employees.

ISSUE DETAILS:
The company is offering a rights issue in the ratio of 3 shares for every 8 shares held to the shareholders whose names were appearing in the register of the company as of March 12, 2021. WSL will be issuing 9868640 equity shares of Rs. 10 each at par to mobilize Rs. 9.87 cr. The issue opens for subscription on March 24, 2021, and will close on April 19, 2021.  Post allotment, shares will be listed on BSE.

The company will be spending Rs. 0.60 cr., for this rights issue process. Out of net proceeds, it will utilize Rs. 6.76 cr. for reduction of its borrowings, Rs. 1.50 cr. for additional working capitals and Rs. 1.01 cr. for general corpus funds.

The Promoters vide their letters dated February 11, 2021, have undertaken to fully subscribe for their Rights entitlement in the Issue. The Promoter reserves the right to subscribe to their entitlement in the Issue by subscribing for renunciation if any made in their favour. The Promoter may also apply for additional Equity Shares in the Issue. As a result of this subscription and consequent allotment, the Promoter may acquire shares over and above their entitlement in the Issue, which may result in an increase of their shareholding above the current shareholding with the entitlement of Equity Shares under the Issue. This subscription and acquisition of additional Equity Shares by the Promoter, if any, shall be made in compliance with the applicable provisions of the SEBI SAST Regulations.

The issue is solely lead managed by Arihant Capital Markets Ltd., while Cameo Corporate Services Ltd. Is the registrar to the issue.

Post issue, WSL's current paid-up equity capital of Rs. 26.32 cr., will stand enhanced to Rs. 36.19 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, WSL has (on a consolidated basis) posted turnover/net profits (loss) of Rs. 77.56 cr. / Rs. - (3.14) cr. (FY19) and Rs. 69.27 cr. / Rs. - (2.12) cr. (FY20). Thus it has been making a loss for the last two fiscals. For the first nine months of the current fiscal ended on December 31, 2020, it has posted a loss of Rs. - (2.05) cr. On a turnover of Rs. 40.10 cr. Thus it continued to be in red for all these periods.

SCRIP MOVEMENT:
WAL last quoted on cum-right at Rs. 25.60 on March 09, 2021, and it turned ex-right on March 10, 2021, at Rs. 19.95 (at close). The company has marked the last 52 weeks high/low of Rs. 23.45 /Rs. 10.35. It last traded at Rs. 15.50 (as of March 19, 2021). With the rights issue pricing, it is looking for a market cap of Rs. 36.19 cr. Whereas with the last traded price, it has a market cap of Rs. 56.09 cr.


Conclusion / Investment Strategy

Since this rights issue is at par, and its last traded price is around Rs. 15.50, cash surplus shareholders may consider investing with a long term perspective as WSL has been posting losses for the last two fiscals as well as 9M of FY21.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Mar 20, 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

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