Srestha Finvest, a non-banking financial company (NBFC), is likely to grab investor attention on Monday, November 11, after the company revealed significant developments regarding its fundraising efforts. On November 8, the company held an extraordinary general meeting (EGM) to approve a special resolution to raise capital through a Qualified Institutional Placement (QIP), a move that could spark interest in its penny stock.
Srestha Finvest Approves Fundraising via QIP
The EGM, conducted at Srestha Finvest’s registered office in Chennai, focused on securing funding through a QIP, which involves issuing equity shares and fully convertible equity warrants to eligible investors. Additionally, the company approved an increase in its borrowing limits, signaling its plans for expansion and financial strengthening.
Earlier in October, the board of directors of Srestha Finvest had also approved a plan to raise up to ₹100 crore through the QIP by issuing equity shares with a face value of ₹1 each. The funds raised will be utilized for various purposes, including debt repayment, working capital requirements, and general corporate needs, in line with applicable legal regulations.
Key Details of the Fundraising Proposal
Srestha Finvest’s board has decided to issue up to 93 crore equity shares, each with a face value of ₹1 and an issue price of ₹1.05, including a premium of ₹0.05 per share. These shares will be allocated to a wide range of investors. The board also approved an increase in the company’s borrowing limit to ₹500 crore, which could enable the company to pursue further growth initiatives.
This capital infusion through the QIP aims to bolster Srestha Finvest’s financial position and facilitate its strategic goals. The company plans to use the proceeds to prepay or repay existing debts, ensuring a more robust balance sheet.
Stock Performance: Volatile Yet Upward Trend
Srestha Finvest’s stock, currently priced below ₹1, has seen modest growth this year, rising by around 11.5%. The penny stock reached a 52-week low of ₹0.49 on March 28, 2024, but has since rebounded, peaking at ₹1.28 on July 26. Over the past year, the stock has gained approximately 15%, reflecting a positive long-term trend despite short-term fluctuations.
The stock has witnessed a surge of about 8% in November alone, indicating renewed investor interest. However, the stock has faced significant losses in recent months, with declines of 12%, 20%, and 19% in August, September, and October, respectively. Despite these setbacks, the company’s QIP announcement may provide a catalyst for renewed investor optimism.
Stock Split and Strategic Growth Plans
In addition to the QIP, Srestha Finvest’s board approved a stock split earlier this year. The company decided on a 1:2 stock split in July 2024, marking the second stock split for the penny stock. The first stock split occurred in 2016, when the company declared a 1:5 stock split. These moves are often seen as a strategy to increase liquidity and make the stock more attractive to a broader range of investors.
Srestha Finvest’s Future Outlook
Looking ahead, Srestha Finvest’s decision to raise capital through the QIP and increase borrowing limits indicates that the company is positioning itself for future growth. The funds raised will be crucial in addressing debt, improving liquidity, and supporting expansion efforts. Investors will be closely watching how the company executes these plans and whether the fundraising efforts translate into improved financial performance.
As the stock has already shown signs of recovery this month, market participants are keen to see if the capital-raising initiative will lead to further upward momentum in the stock price.
Srestha Finvest’s penny stock, priced below ₹1, is set to attract increased attention from investors following the announcement of its plans to raise capital via a QIP. With a focus on debt reduction, working capital needs, and overall growth, the company’s strategy seems aimed at strengthening its financial position and unlocking new potential. Investors should closely monitor the stock in the coming days, especially as the company prepares for its upcoming financial results and the potential impact of the capital-raising move.
Disclaimer: The information provided above reflects the views of individual analysts and brokerage firms. Investors are advised to conduct their own research and consult with certified experts before making any investment decisions.