GVP Infotech Limited Announces ₹21.17 Crore Rights Issue

In a major move aimed at strengthening its capital base, GVP Infotech Limited has announced a rights issue worth approximately ₹21.17 crore. The decision was made public following a Board of Directors meeting held on 23rd June 2025, at the company’s registered office in New Delhi.

The board has proposed issuing 2,11,72,007 equity shares of face value ₹2 each, at an issue price of ₹10 per share, which includes a premium of ₹8 per share. This issue is being extended to all eligible equity shareholders as of the record date, which has been fixed as Monday, June 30, 2025.

Rights Entitlement and Pricing

As per the board resolution, shareholders will be entitled to receive 13 equity shares for every 100 fully paid-up shares they hold in the company as of the record date. This method ensures proportional ownership and provides shareholders an opportunity to increase their stake at a discounted price compared to market value.

The issue price per share is ₹10. Out of this, ₹5 will be payable at the time of application, and the remaining ₹5 will be collected at the time of the first and final call, as determined by the board in coordination with the Rights Issue Committee.

This staggered payment plan is expected to ease the financial burden on shareholders and encourage wider participation in the capital-raising effort.

Purpose and Implication of the Rights Issue

The rights issue is likely aimed at boosting the company’s working capital, funding expansion plans, or meeting regulatory compliance. Although the company has not explicitly stated the use of proceeds, such capital infusions are commonly used for strengthening the balance sheet, supporting strategic initiatives, and reducing reliance on external borrowings.

With this capital, GVP Infotech could be in a stronger position to scale its IT and software services business, explore new product development, or expand its market footprint.

Share Capital Before and After the Rights Issue

Before the rights issue, GVP Infotech had 16,28,61,590 equity shares outstanding. Upon full subscription of the rights issue, the total outstanding shares will increase to 18,40,33,597 equity shares, reflecting an expansion of the company’s equity base.

Such a move, while dilutive in the short term, is considered beneficial for long-term investors if the raised capital is utilised effectively to generate returns exceeding the cost of equity.

Background and Board's Strategic Direction

The rights issue announcement follows an earlier board meeting held on March 19, 2025, where the initial proposal was discussed. The official outcome and detailed plans were finalized in the board meeting dated June 23, 2025. The company has complied with the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, by submitting all relevant disclosures on time.

The board's decision comes after careful deliberation and in consultation with the Rights Issue Committee, showcasing the management’s strategic planning and commitment to shareholder value.

Terms of the Issue and Next Steps

The following are the key terms and conditions of the rights issue as outlined in the Annexure-I of the company’s communication:

• Equity Shares Offered: 2,11,72,007 equity shares

• Face Value: ₹2.00 per share

• Issue Price: ₹10.00 per share

• Rights Ratio: 13:100

• Terms of Payment: ₹5 at application, ₹5 at final call

The Letter of Offer containing detailed terms, conditions, and application procedures will be dispatched to eligible shareholders shortly. It will also be available on the company’s official website and the NSE platform.

Market Reaction and Investor Sentiment

While the announcement is a significant development for GVP Infotech, the stock market’s reaction will depend on various factors, including overall market sentiment, valuation of the rights issue, and shareholder confidence in the company’s future plans.

Typically, rights issues at a discounted price to the market may result in short-term downward pressure on the stock, but they often present a valuable opportunity for long-term investors.

Importance for Existing Shareholders

For existing shareholders, participating in the rights issue allows them to avoid dilution of their ownership and buy shares at a preferential price. It also reflects positively on the company's strategy to raise funds without incurring debt.

However, shareholders who choose not to participate may see a proportional reduction in their stake, although they have the option to renounce their rights entitlement in favour of other investors on the stock exchange.

Legal and Regulatory Compliance

GVP Infotech has ensured strict compliance with the applicable regulations under SEBI (LODR) Regulations, 2015. The rights issue has been structured in accordance with SEBI’s rights issue norms, and all related announcements have been made on official platforms like the NSE Listing Centre.

The company has also linked the announcement of the earlier board meeting outcome, dated March 19, 2025, for transparency and public reference.

Rights Issue as a Strategic Tool

Rights issues are commonly used by listed companies to raise capital in a cost-effective and shareholder-friendly manner. Unlike public offerings that involve third-party investors, rights issues empower existing shareholders, giving them first preference to invest further.

For GVP Infotech, this rights issue may help reduce its dependence on external financing, improve its creditworthiness, and enable it to invest in long-term projects and technological upgrades.

Conclusion

The approval of the ₹21.17 crore rights issue marks a significant development for GVP Infotech and signals the company's intent to reinforce its financial position through shareholder participation.

As the record date approaches, investors should closely monitor updates from the company and evaluate their position regarding the rights entitlement. The offering presents an opportunity for eligible shareholders to capitalize on discounted equity acquisition, while also supporting the company's growth journey.

GVP Infotech’s move is not just a capital-raising exercise; it is a strategic ini

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