Penny stock Srestha Finvest achieved a remarkable milestone by hitting its 5 per cent upper circuit limit at ₹0.89 on Thursday, October 10. This surge followed the company’s announcement of a significant fundraising initiative through Qualified Institutional Placement (QIP). The company’s recent board meeting on October 9 also yielded several pivotal decisions that could reshape its financial landscape.
Outcomes from the Board Meeting
During a pivotal board meeting on October 9, 2024, from 9:00 P.M. to 10:00 P.M., the Board of Directors deliberated and approved several key strategies aimed at enhancing the company’s capital structure and operational capabilities.
A major decision from the board was the approval to raise funds through the issuance of equity shares with a nominal face value of Re.1 each, totaling an ambitious ₹100 crore. This initiative will be executed via a Qualified Institutional Placement (QIP), adhering to all pertinent regulations. The board acknowledged that this action is contingent upon receiving the appropriate approvals from the company’s shareholders and relevant regulatory bodies.
The funds generated from the QIP are earmarked for several crucial needs, including the pre-payment and repayment of debts, addressing working capital requirements, and supporting general corporate needs, aligning with permissible activities outlined by applicable laws.
Additionally, the board sanctioned the issuance of up to 93 crore equity shares at an issue price of ₹1.05, which includes a premium of ₹0.05 per share. This preferential allotment is still subject to necessary approvals from shareholders and other regulatory entities.
The allotment will encompass 93 crore shares distributed among a diverse roster of allottees, including notable figures and corporate entities such as Sneha Bhandari, Sunil Bhandari, and Financial World India Private Limited, among others. This diverse participation showcases strong investor confidence in Srestha Finvest’s growth trajectory.
Furthermore, the board decided to enhance the company’s borrowing capacity, increasing it to a substantial ₹500 crore. In a follow-up to these decisions, the board has scheduled an Extraordinary General Meeting (EGM) on Friday, November 8, 2024, at 4:00 P.M. at the company’s registered office. This meeting will serve as a platform to delve deeper into these developments and secure member approvals where necessary.
Recent Developments
On September 23, 2024, Srestha Finvest made headlines by reaching its record date, determining shareholder eligibility for a stock split. This move subdivided each fully paid-up equity share with a face value of ₹2 into two fully paid equity shares valued at ₹1 each, thereby increasing liquidity and potentially attracting a wider investor base.
The fiscal year 2023-2024 was a significant period for Srestha Finvest, which reported a profit of ₹173.86 lakh, marking a substantial recovery from a loss of ₹497.41 lakh in 2022-2023. As mandated by RBI regulations, the company allocated ₹37.51 lakh, or 20 per cent of its net profit, to statutory reserves, reinforcing its financial stability.
Additionally, during the fiscal year, the company successfully issued 25 crore equity shares, each with a face value of ₹2, to selected individuals under the Non-Promoter Public Category. This strategic move increased the company’s paid-up equity share capital to ₹116 crore, subsequently split into 58 crore fully paid equity shares with a face value of ₹2 each. The funds raised through the preferential offering were utilized effectively for planned corporate objectives.
Stock Performance Analysis
Srestha Finvest’s stock has demonstrated impressive growth, gaining over 36 per cent in the past year and surging 46 per cent year-to-date. After two months of decline, it has rebounded strongly, climbing 14 per cent in October alone. This follows a challenging period, where it witnessed a 19.5 per cent dip in September and a 12 per cent drop in August. Before these declines, the stock enjoyed four consecutive months of increases, with notable gains of 22 per cent in July, 38 per cent in June, 8 per cent in May, and 17.6 per cent in April.
Currently, the stock is still over 30 per cent below its 52-week high of ₹1.28, reached in July, while simultaneously rallying approximately 82 per cent from its 52-week low of ₹0.49 recorded in March. This dynamic performance underscores the volatility and potential of Srestha Finvest as a penny stock, making it a subject of keen interest for investors looking to capitalize on emerging opportunities in the market.
