Small-cap stock below ₹5 jumps 5% despite weak markets. Here’s is why

Small-cap stock below ₹5: Despite weak stock market sentiments on Dalal Street, Vikas Ecotech shares have risen over 5 per cent in intraday trade. In early morning deals on Monday, Vikas Ecotech share price today opened higher and went on to hit day's high of ₹3.05 apiece levels, logging over 5 per cent intraday rise within few minutes of stock market's opening bell today. As per the latest exchange filing, the board of directors of the small-cap company has received a proposal for ₹35 crore fund raise via preferential issue.

Penny stock below ₹5 informed Indian stock market bourses about the fund raise proposal citing, "In terms of Regulation 29 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we wish to inform you that the meeting of the Board of Directors of the Company shall be convened on Thursday, August 31, 2023 at the Registered office of the Company at 34/1, Vikas Apartment, East Punjabi Bagh, Delhi-110026, inter-alia, to transact the following businesses: 1] to issue of securities, convertible instruments on preferential basis to Mr. Vikas Garg, promoter of the Company, who signified his intent in writing to subscribe additional equity/convertible instrument/warrants, or any other combination thereof, in cash, at premium, for an amount not exceeding Rs. 350 Million ( ₹35 crore); 2] to increase authorise capital of the Company and consequent alteration in Memorandum of Association of the Company; 3] to consider and approve any other item(s) with the permission of the Chair."

Vikas Ecotech news

The small-cap company recently announced that it aiming to become a zero debt company by end of the current financial year. In one of its previous exchange filing, the small-cap company informed Indian stock market that it has paid up to ₹101.20 crore band debt from its peak and now just ₹60 crore band debt now left to be repaid. The company went on to add that it would repay an additional ₹10 crore by end of second quarter of the current financial year.

“In terms of Regulation 30 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, we would like to update you on the captioned subject that the Company has paid back another Rs. 50 Million Approx. ( ₹5 crore), taking the total amount of bank-debt down to Rs. 600 Million Approx. ( ₹60 crore) and the overall bank-debt reduction of Rs. 1012 Million ( ₹101.20 crore) till date from the peak," the small-cap company said in its exchange communication.

FII-backed company

Recently, Mauritius-based foreign institutional investor AG Dynamic Funds Limited bought stake in this small-cap company. The stake buy was in line with the fund raise drive of Vikas Ecotech Ltd where the small-cap company allotted fresh equities to AG Dynamic Funds Limited and two other FIIs. Other two FIIs were Vikasa Global Fund PCC- Eubilia Capital Partners Fund I and Calypso Global Investment Fund.

The small-cap company had informed BSE that fund raise committee of the company approved 8,04,00,000 company shares to the Mauritius-headquartered FII whereas 8,03,00,000 shares were allotted to Vikasa Global Fund PCC- Eubilia Capital Partners Fund I. The fund raise committee allotted 1,78,00,000 shares to Calypso Global Investment Fund. These shares were allotted at a price of ₹2.80 apiece. This means net fund raised from these FII investment in the company was ₹49.98 crore. Out of these ₹49.98 crore, AG Dynamics Funds Limited bought this penny stock worth ₹22,51,20,000 or around ₹22.51 crore.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.