Bhakti Gems RI review (Avoid)

• BGIL is in the business of manufacturing and marketing gold jewellery.
• Its financial performance so far is average.
• It operates in a highly competitive and fragmented segment with many players.
• There is no harm in skipping this fully priced bet that is having an average financial performance.

ABOUT COMPANY:
Bhakti Gems & Jewellery Ltd. (BGJL) is the manufacturer, wholesaler and supplier of gold jewellery and is headquartered in Ahmedabad, Gujarat. The Company is mainly focused on traditional Indian jewellery. Its products include handmade gold jewellery studded with precious and semi-precious stones such as diamond, ruby, cubic zirconia (cz) etc. The jewellery is designed by it and manufactured on a job-work basis at Ahmedabad, Rajkot and Mumbai.

BGJL is a customer-centric Company, its prime focus is to attain the utmost client satisfaction by offering them quality-assured products. It also delivers products in quality packaging material to ensure safe transport. Moreover, its ethical trade practices, transparent business dealings and timely delivery of products help it in maintaining cordial relations with customers. As of the date of filing of this offer document, it had 19 employees on its payroll. As of the date of this Letter of offer, the company does not hold any intellectual property.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 5013173 equity shares of Rs. 10 each at a fixed price of Rs. 12 per share to mobilize Rs. 6.02 cr. The issue opens for subscription on June 09, 2023, and will close on June 20, 2023. It is offering RI in the ratio of 1 for 2 to eligible stakeholders as of the record date of May 31, 2023. The full amount is to be paid on an application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.40 cr. for this RI process and from the net proceeds it will utilize Rs. 5.37 cr. for working capital, and Rs. 0.25 cr. for general corporate purposes.

This RI is self-managed by the company management and Skyline Financial Services Pvt. Ltd. is the registrar of the issue.

Post RI, BGJL's current paid-up equity capital of Rs. 10.03 cr. will stand enhanced to Rs. 15.04 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 18.05 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, BGJL has posted a turnover/net profit of Rs. 62.38 cr. / Rs. 0.07 cr. (FY19), Rs. 55.13 cr. / Rs. 0.23 cr. (FY20), Rs. 67.95 cr. / Rs. 0.27 cr. (FY21), Rs. 88.97 cr. / Rs. 0.88 cr. (FY22).

For 9M of FY23 ended on December 31, 2022, it earned a net profit of Rs. 0.47 cr. on a turnover of Rs. 79.51 cr. As per the exchange filing, BGJL has reported a turnover of Rs. 102.91 cr. with a net profit of Rs. 0.80 cr. (on an unaudited basis). Thus its financial performance is average with varying margins.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 540545 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 13.80 on May 30, 2023, and opened on an ex-right basis at Rs. 13.50 on May 31, 2023. Since then, it has marked a high/low of Rs. 13.74 / Rs. 12.00. The scrip last closed at Rs. 13.03 as of June 07, 2023. For the last 52 weeks, it has posted a high/low of Rs. 21.05 / Rs. 11.01. The promoters' holding has been constant at 39.19% for the last three quarters ended on March 31, 2023. The counter is well managed above the offer value to lure investors.

Conclusion / Investment Strategy

The company is engaged in the highly competitive and fragmented segment of jewellery manufacturing and marketing. Its financial performance so far has been average with varying margins. The RI is fully priced based on its financial data. There is no harm in skipping this pricey bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on June 7, 2023

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

About Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

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Bhakti Gems and Jewellery Limited Review by Dilip Davda

The Bhakti Gems and Jewellery Rights Issue 2023 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Bhakti Gems and Jewellery Rights Issue 2023 worth investing. The Bhakti Gems and Jewellery Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Bhakti Gems and Jewellery Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Bhakti Gems and Jewellery Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

Bhakti Gems RI review (Avoid)

Conclusion / Investment Strategy

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