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• This is the 2nd RI from the company since October 2023.
• The last RI was at a price of Rs. 4.50 to mobilize Rs. 7.61 cr.
• Based on its financial performance so far, the issue appears fully priced.
• Promoters' holding is just around 27.63%.
• Well-informed/cash surplus investors may park moderate funds in this "High Risk/Low Return" bet.
PREFACE:
The company came with its 1st Rights Issue (RI) in October 2023, for 16911111 equity shares of Re. 1 each at a price of Rs. 4.50 to mobilize Rs. 7.61 cr. and now coming for 2nd RI of 76611591 shares at a price of Rs. 6.26 to mobilize Rs. 48.19 cr. Low promoter's holding and almost static top and bottom lines for the reported periods raises concern.
ABOUT COMPANY:
Bhandari Hosiery Exports Ltd. (BHEL) is one of the leading manufacturers of Knitted Fabric and Garments with strong designing capability. The products are sold by the Company to its domestic and international customers. Over the years, BHEL has established a strong loyal customer base in various countries across continents.
The Company owns State of the Art production facility with designing capability equipped with latest equipment and technology at village Meherban, Rahon Road, Ludhiana, Punjab, India. Ludhiana is an established market place for knitted fabrics, garments and embroidery. Ludhiana is extremely well connected with the entire country and with abundant availability of skilled and semi-skilled work force.
The Company is a Knitted Fabric and Garment manufacturer with designing capabilities and with fabric dyeing and fabric processing. The Company also manufactures, processes, and trades dyed and un-dyed fabrics. Its manufacturing unit is located at Bhandari House, Village Meherban, Rahon Road, Ludhiana-141007, Punjab, India. The products of the Company are knitted hosiery garments such as t-shirts, pullovers, sweat shirts, barmudas, polo-shirts, track suits, pajamas, lowers, ladies knitted tops with embroidery and prints etc. These products are sold in domestic as well as overseas markets. The Company has no Brands of its own.
Company has not imported any technology from abroad. However, the company has been using imported machinery and in the process is making efforts for absorption of latest technology. Company has necessary research and quality control facilities. These efforts have resulted into improvement in efficiency and in quality and reduction in cost of production. As of the date of filing this offer document, the company had 385 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 76611591 equity shares of Re. 1 each at a fixed price of Rs. 6.26 per share to mobilize Rs. 47.96 cr. The RI opens for subscription on July 08, 2024, and will close on July 22, 2024. The company is offering RI in the ratio of 15 for every 32 shares held by its stakeholders as of the record date of June 19, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.80 cr. for this RI process, and from the net proceeds, it will utilize Rs. 7.22 cr. for repayment of certain borrowings, Rs. 36.00 cr. for working capital, Rs. 3.94 cr. for general corporate purposes.
The RI is self-managed by the company itself, and Link Intime India Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 16.34 will stand enhanced to Rs. 24.01 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 150.27 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company posted a total revenue/net profit of Rs.226.07 cr. / Rs. 1.67 cr. (FY21), Rs. 283.44 cr. / Rs. 6.27 cr. (FY22), Rs. 283.31 cr. / Rs. 6.51 cr. (FY23). For 3Qs of FY24 ended on December 31, 2023, it earned a net profit of Rs. 4.90 cr. on a total revenue of Rs. 177.94 cr. Its top and bottom line remained almost static for FY22 and FY23.
While for FY24, it earned a net profit of Rs. 6.53 cr. on a total revenue of Rs. 267.06 cr. Thus while its top line posted decline, it marked improvement in its bottom line for the concluded fiscal.
DIVIDEND POLICY:
It paid a dividend of 1% for FY20, FY21 and FY22. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. However, the offer document is silent on its dividend policy.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 512608 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 8.74 on June 18, 2024, and opened on an ex-right basis at Rs. 7.95 on June 19, 2024. Since then, it has marked a high/low of Rs. 8.30 / Rs. 7.65. The scrip last closed at Rs. 7.81 as of July 04, 2024. For the last 52 weeks' it has posted a high/low of Rs. 11.35 / Rs. 3.86.
The promoters' holding has been constant at 27.63% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to tempt investors.
Review By Dilip Davda on July 4, 2024
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 ).
The Bhandari Hosiery Exports Rights Issue 2024 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 Bhandari Hosiery Exports Rights Issue 2024 worth investing. The Bhandari Hosiery Exports Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Bhandari Hosiery Exports Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Bhandari Hosiery Exports Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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