Two ongoing rights issue

Well, while IPO market turned dizzy, funding from bank turned cumbersome following rising NPAs from big houses, regulator recommended rights issue mode for raising funds for long term by needy corporate. This has definitely boosted the trends for rights issue which were having lull season till last year.

As of writing this (i.e. as on 26.07.2020) we have two ongoing rights issue that have followed the conventional method of getting regulators approval with draft documents filing as well as final offer documents filing. This process takes its own time and there are few more draft documents waiting for regulators approval.

However, for the information of investors, I am giving below at glance details for the ongoing two rights issues of Shriram Transport and PVR:

Shriram Transport Finance Co. Ltd. (STFCL):

 STFCL, a part of Shriram group of companies, has a track record of over three decades in the commercial vehicle financing industry in India. If focuses in catering to “First Time Buyers”.

 The company is financing for various kinds of commercial vehicles, including passenger commercial vehicles, heavy goods vehicle, light goods vehicle, farm equipments (tractors and harvesters) as well as ancillary equipment and vehicle parts finance, such as loans for tyres and engine replacements, construction equipment vehicles & machinery finance.

 Company’s network of branches across India has been a key driver of growth over the years. As of March 31, 2020, it had 1,758 branches across India. The company has also established its presence in 844 rural centres as of March 31, 2020,

 STFCL is offering 26178777 equity share of Rs. 10 each at a price of Rs. 570 per share as a rights issue in the ratio of 3 shares for every 26 shares held as on record date of 10.07.20. This issue has already opened for subscription on 16.07.20 and is closing on 30.07.20. Full amount is payable on application for this offer. Shareholders accepting full entitlement can opt for additional shares that will be allotted in proportion of availability. The company mulls raising Rs. 1492.19 cr. from this offer. Out of these funds, it will use Rs. 1464.15 cr. for capital base augmenting and the rest (Rs. 28.05 cr.) as issue related expenses.

 Post issue, company’s current paid up equity capital of Rs. 226.88 cr. will stand enhanced to Rs. 253.07 cr.

 This issue is jointly lead managed by ICICI Securities Ltd., BNP Paribas, Citigroup Global Markets India Pvt. Ltd., Credit Suisse Securities (India) Pvt. Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., J. P. Morgan India Pvt. Ltd., Axis Capital Ltd., SBI Capital Markets Ltd. while Kfin Technologies Pvt. Ltd. and Integrated Registry Management Services Pvt. Ltd. are acting as registrars to the issue. Post allotment, shares will be listed on BSE and NSE.

 For the last three fiscals, on a consolidated basis, STFCL has posted revenue/net profits of Rs. 13443.95 cr. / Rs. 2548.93 cr. (FY18), Rs. 15529.15 cr. / Rs. 2575.68 cr. (FY19) and Rs. 16562.36 cr. / Rs. 2512.27 cr. Thus while its top line has shown growth, bottom line has remained stagnant. Its NAV as on 31.03.20 was at Rs. 799.64 per share.

 On share price movements, it was quoted at Rs. 758.20 on the last cum-right trading day (08.07.20), Rs. 721.20 on first ex-right trading day (09.07.20). Its last traded price is Rs. 690.75 (20.07.20).

 With this offer price, the company is aiming at a market cap of Rs. 14424.86 cr.

 PVR Ltd. (PVR):

 PVR Ltd is the market leader in terms of screen count in India, as of January 2019, with a market share of 28% in total multiplexes based on the number of screens in India (Source: CRISIL Report). It is also  the leader in terms of screens in seven out of eight key cities in India, which include Ahmedabad, Bengaluru, Chennai, National Capital Territory of Delhi, Hyderabad, Mumbai and Pune (Source: CRISIL Report). Further PVR is the market leader in three out of the four regions in India, i.e. north, south and west regions of India, in terms of screens among the multiplex operators in India (Source: CRISIL Report).

 The company offers a diversified cinema viewing experience through its formats, including ‘PVR Director’s Cut’, ‘PVR Gold Class’, ‘PVR IMAX’, ‘PVR Superplex’, ‘PVR P[XL]’, ‘PVR Playhouse’, ‘PVR ECX’, ‘PVR Premiere’, ‘PVR ICON’, ‘PVR LUXE’, ‘PVR Cinemas’ and ‘PVR Utsav’, and pursuant to its acquisition and amalgamation of SPI Cinemas, ‘Escape’, ‘Sathyam’ and ‘Palazzo’.

 PVR is offering 3823872 equity shares of Rs. 10 each at a price of Rs. 784 per share as rights issue in the ratio of 7 shares for every 94 shares held as on 10.07.2020. The issue has already opened for subscription on 17.07.20 and will close on 31.07.20. Full money it to be paid on application. The company mulls raising Rs. 299.79 cr. from this offer. From the funds so mobilized the company will utilize Rs. 224.85 cr. for repayment/prepayment of a portion of principle and interest, Rs. 72.51 cr. for general corpus funds needs and will spend Rs. 2.43 cr. as issue expenses.

 While Axis Capital Ltd. is the sole lead manager to this offer, Kfin Technologies Pvt. Ltd. is the registrar. Post allotment, shares will be listed on BSE and NSE.

 Post issue company’s current paid up equity capital of Rs. 51.35 cr. will stand enhanced to Rs. 55.17 cr.

 For the last two fiscals, on a consolidated basis PVR has reported turnover/net profits of Rs. 3118.70 cr. / Rs. 189.40 cr. (FY19) and Rs. 3452.23 cr. / Rs. 26.85 cr. (FY20). Thus it has suffered a setback for FY20, which is attributed to higher provisions for finance cost (Rs. 481.79 cr. v/s Rs. 128.01 cr.) and depreciation (Rs. 542.43 cr. v/s Rs. 191.28 cr.).  As on 31.03.20 its NAV stood at Rs. 288.30 per share.

 On share price movements, it was quoted at Rs. 1059.80 on the last cum-right trading day (08.07.20), Rs. 1042.85 on first ex-right trading day (09.07.20). Its last traded price is Rs. 1034.35 (20.07.20).

 With this offer price, the company is aiming at a market cap of Rs. 4325.56 cr.

 (Note: quotes are given on the basis of closing on respective dates)

 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 own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. 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 these offers.

 (SEBI registered Research Analyst-Mumbai).