Just had a thought based on yesterday’s fillings. For context, co. has passed board resolution (to be passed in September by shareholders) to raise equity and debt.
Equity : Equity will be raised from Rs. 16.5 cr (1.65 cr. shares of 10 Rs. each) to 25 cr. (2.5 cr. shares of 10 Rs. each). Therefore, 8.5 cr. shares @ CMP 363 = 8.5 X 363 = Rs. 3085 cr. could be raised.
Debt : Resolution passed to raise up to Rs. 1000 cr.
My thought is this:
The company is about raise money to expand infrastructure and team quite aggressively. It might also be thinking of doing more marketing to quickly capture larger market share. Two important notices in this context:
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Changing the life of computer hardware from 3 years to 6 years: If large capex in infra was done in small time frame(within 1 FY), the hit because of the depreciation at the end of the first year would be have been quite large doing opposite of what happened this quarter with the sudden jump. So, 6 years instead of 3 will ease it out for the P&L. The bigger infra would obviously bring in larger income but utilization on the infra would be lagging behind the capex as marketing would slowly be ramped up.
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Discussion with Param Capital (Mukul Agarwal): Possibility of equity being raised from him. The company is right up his lane.
Need more profit => Need more sales => Need more infra => Need more capital => Change depreciation to accommodate larger capex => Raise capital from equity/debt => Talking with investors including Mukul Agarwal.
