Penny Stock Below ₹1: NBFC Standard Capital Markets Raises ₹50 Crore via NCDs

Introduction

In a significant development in the Indian stock market, Standard Capital Markets Limited, a Non-Banking Financial Company (NBFC) listed on the Bombay Stock Exchange (BSE), has raised ₹50 crore through the issuance of Non-Convertible Debentures (NCDs). This move has garnered attention due to the company's status as a penny stock, with its share price trading below ₹1.

NCD Fundraise Details

On January 15, 2025, the Board of Directors of Standard Capital Markets approved the allotment of 5,600 secured, unrated, unlisted NCDs, each with a face value of ₹1,00,000. The total issue aggregates to ₹56 crore, conducted on a private placement basis. This fundraise follows an earlier allotment of 1,500 NCDs in December 2024, amounting to ₹15 crore. The back-to-back fundraises highlight the company's efforts to strengthen its financial position amid a challenging market environment.

Company Background and Recent Developments

Established in 1987 and registered as an NBFC with the Reserve Bank of India, Standard Capital Markets provides a wide range of financial services, including advisory services, arbitration, due diligence, litigation support, and assistance with licensing and commercial contracts. In December 2023, the company implemented a stock split and issued bonus shares, which adjusted the stock price to below ₹1.

Despite these measures, the company has faced significant headwinds in recent months. Financial Performance Standard Capital Markets reported a net loss of ₹0.51 crore in the September 2024 quarter, compared to a net profit of ₹2.31 crore in the same quarter of the previous year. However, sales rose 71.33 percent year-on-year to ₹9.68 crore during the same period, up from ₹5.65 crore.

Market Reaction

Following the announcement of the ₹56 crore NCD fundraise, shares of Standard Capital Markets surged to hit the 5 percent upper circuit limit at ₹0.88 on January 16, 2025. This sharp rise indicates positive investor sentiment and confidence in the company's efforts to bolster its financial position.

Strategic Implications

The successful issuance of these NCDs is a testament to the strong investor confidence in Standard Capital Markets' business model and growth prospects. The funds raised are expected to be utilized for capacity expansion, operational improvements, and debt reduction, aligning with the company's strategic objectives to strengthen its financial stability and support its operational activities.

Standard Capital Markets' recent ₹50 crore NCD fundraise marks a significant step in its efforts to enhance financial stability and support growth initiatives. While the company faces challenges, the positive market reaction and strategic utilization of the raised funds indicate a focused approach towards long-term value creation. Investors and market participants will be keenly observing the company's progress in the coming quarters.