Digvijay Finlease Ltd (Only Nsdl) Unlisted Shares

Are you looking for a different kind of NBFC—one that generates revenue primarily from its investment portfolio rather than traditional lending? Digvijay Finlease Limited is a public unlisted NBFC (Non-Banking Financial Company) registered with the RBI. Incorporated in 2001, the company has a unique business model where its main sources of income are dividends from investments and profits from selling investments, rather than just interest on loans.

Company Overview:

• Incorporated: November 5, 2001.

• Type: Public Unlisted Company, classified as ‘Company Limited by Shares’.

• Registered Office: 21 Strand Road, Kolkata, West Bengal.

• Registration: Registered as an NBFC with the Reserve Bank of India (RBI).

Business Model: How Does Digvijay Finlease Make Money?

Unlike traditional NBFCs that rely heavily on interest income from loans, Digvijay Finlease’s revenue model is unique. Its income streams are:

1. Selling of Investments (Primary Source): The company actively buys and sells both long-term and short-term investments. Profits from these transactions form a major part of their revenue.

2. Dividend Income (Major Contributor): The company holds a significant portfolio of stocks and shares, and dividends from these investments contribute substantially to the bottom line.

3. Interest on Loans (Minor Source): Interest from loans given to companies is a smaller, more fluctuating part of their total income.

4. Income from Fixed Deposits: A minor source of income.

Revenue Breakdown (2017-2022):

The table below clearly shows the unique nature of the company’s earnings. Dividend Income and Profits from Selling Investments are the dominant contributors, with interest income playing a smaller role.

Key Observations:

• Dividend Powerhouse: The company consistently earns crores in dividend income (₹47.23 Cr in 2022, ₹67.53 Cr in 2020).

• Trading Profits: Profits from selling investments have been a major source, particularly in FY17 (₹77.44 Cr).

• Low Lending Income: Interest from loans has declined significantly in recent years.

Corporate Action: Amalgamation of Arham Securities Pvt. Ltd.

A significant event in the company’s history was the merger with Arham Securities Pvt. Ltd., approved by the NCLT, Kolkata Bench on October 11, 2018.

Details of the Scheme:

• Transferor Company: Arham Securities Pvt. Ltd.

• Transferee Company: Digvijay Finlease Limited.

• Merger Ratio: 4 shares of Digvijay Finlease for every 5 shares held in Arham Securities.

Share Calculation:

• Total outstanding shares of Arham Securities: 35,48,400

• Shares to be issued by Digvijay Finlease (as per 4:5 ratio): (35,48,400 / 5) * 4 = 28,38,720 shares

• Adjustment: 23,192 equity shares held by the transferor company (Arham) in Digvijay Finlease were canceled as per the scheme.

• Net New Shares Issued: 28,38,720 – 23,192 = 28,15,528 shares

Result: Post-merger, the total outstanding shares of Digvijay Finlease increased. The shareholders of Arham Securities became shareholders of Digvijay Finlease.

Shareholding Pattern & Outstanding Shares:

• As of March 31, 2019: Total outstanding shares stood at 13,259,420 (approx. 1.32 Crore shares), an increase of 28,15,528 shares from the previous year due to the merger.

Key Investment Highlights:

1. Unique Business Model: Not a traditional lender; generates income through a strategic investment portfolio.

2. High Dividend Income: Consistent and substantial dividend income indicates a high-quality, carefully selected investment portfolio.

3. RBI Registered NBFC: Operates under the regulatory framework of the RBI, ensuring compliance.

4. Potential Value Unlocking: The company’s value is closely tied to the performance of its investment portfolio.

5. NCLT Approved Merger: The successful amalgamation with Arham Securities streamlined the corporate structure.

Risks to Consider:

1. Revenue Volatility: Income from selling investments can be highly volatile, as seen in the table (₹77 Cr in FY17 vs. ₹5 Lakhs in FY22).

2. Market Dependent: The company’s performance is heavily dependent on stock market movements and dividend declarations from its portfolio companies.

3. Declining Lending Business: The traditional lending business (interest income) has shrunk considerably, making the company more of an investment company than an NBFC.

4. Liquidity Risk: As an unlisted company, liquidity in the shares may be limited.

5. Transparency: The exact composition of the investment portfolio is not detailed here, making it hard to assess the underlying asset quality.

The Opportunity:

Digvijay Finlease is not a typical NBFC. It functions more like a passive investment holding company with an NBFC license. For investors who trust the management’s ability to pick winning stocks and collect growing dividends, this could be an interesting vehicle to gain exposure to a diversified portfolio of investments through a single unlisted entity. Its value will ultimately be determined by the market value of its underlying investments.

Ready to Explore This Unique NBFC Investment Opportunity?

Buy Unlisted Shares of Digvijay Finlease Ltd exclusively through Unlisted Network.

Invest in a company with a unique, investment-driven business model.