Penny Stock Below Rs 5 Declares Fundraising of Rs 49 Cr Via Rights Issue: Do You Own?

On Tuesday, the shares of Srestha Finvest ended 3.65% higher at Rs 1.42 apiece on the buzz of fundraising proposal via rights issue.

The Board of Directors of the company in its meeting on Tuesday, December 19, 2023 has inter-alia, considered and approved "Increase in authorised share capital of the company from present Rs. 1,17,00,00,000/- (Rupees One Hundred Seventeen Crores Only) divided into 58,50,00,000 (Fifty Eight Crores Fifty lakhs) equity shares of face value of Rs. 2/- (Two Rupee) each to 1,67,00,00,000/- (Rupees One Hundred Sixty Seven Crores Only) divided into 83,50,00,000 (Eight Three Crores Fifty Lakhs) equity shares of face value of Rs. 2/- (Rupees Two) each and that clause V of Memorandum of Association be altered accordingly," as per a regulatory filing.

The company said that the Board also approved the "Approval for raising of funds through issuance and allotment of equity shares having face value of Rs.2.00/- (Rupee Two Only) ('Equity Shares') for an aggregate amount not more than Rs. 49,00,00,000 (Rupees Forty Nine Crore Only) on right issue basis, on such terms and conditions as may be decided by the Board of Directors of our Company to the eligible equity shareholders of the Company, as on the record date (to be notified subsequently)."

The company generated a net income of Rs 2.10 Cr in the September 2023 quarter compared to Rs 0.29 Cr in the September 2022 quarter. Its net expenses reached Rs 4.05 Cr in Q2FY24 which was Rs 0.42 Cr in Q2FY23. It booked a negative of EBIT of Rs -1.95 which was Rs -0.13 in the year-ago quarter. Srestha Finvest reported a net loss of Rs 3.30 Cr in Q2FY24 compared to a net loss of Rs 0.14 Cr in Q2FY23.

The market capitalization of Srestha Finvest Ltd., a micro-cap company, is Rs 83 Cr as of Tuesday's closing session. Srestha Finvest Limited is a public limited company that is registered with the Registrar of Companies in Tamilnadu, and it has its registered office in Chennai, Tamil Nadu. The company's main business activities include leasing, hire purchase, financing, immovable and moveable property, and lending against securities. The company's shares are traded on the Bombay Stock Exchange Limited and the Metropolitan Stock Exchange Ltd. The firm is registered with the Reserve Bank of India as a category 'B' NBFC.

The scrip reached a 52-week-high of Rs 1.50 (19/12/2023) and a 52-week-low of Rs 0.95 (25/05/2023), indicating that at the current market price, the stock is trading 49.47% above the 1 year low at a PE of -10.56x and PB ratio of 0.74x.