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• The company is in the business of manufacturing, processing and trading of edible oils, food, feeds and other agri commodities.
• It marked almost static top and bottom lines for the reported periods.
• The company is operating in a highly competitive and fragmented segment.
• Based on its financial performance, the RI appears fully priced.
• Well-informed investors may park moderate funds for long term.
ABOUT COMPANY:
Diligent Industries Ltd. (DIL) is currently engaged in the business of manufacturing, processing and trading of edible oils, food, feeds and agriculture commodities in India. With a view to get hold, stabilize, compete and increase the Company's presence in the market the company is constantly attempting to utilize the available resources and production capacity at optimum level.
The company has also ventured in to refined edible oils, which would certainly create good presence and name for it. This would also enable the Company to generate better revenue in the near future. The Company has state of the art processing plant located in lap of the lush green nature spread in 20 acres of land at Denduluru, West Godavari, Andhra Pradesh, India.
DIL also deals in the agricultural commodities like Maize, Paddy, Rice and Soya. It also has a paddy processing unit of 120 Tons per day (TPD) with a sortex unit facility for rice processing which is a backward integration strategy. As of March 31, 2024, it had 22 employees on its payroll and additional 50 daily wagers.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 137232000 equity shares of Re. 1 each at a fixed price of Rs. 3.60 per share to mobilize Rs. 49.40 cr. The RI opens for subscription on November 11, 2024, and will close on November 25, 2024. The company is offering RI in the ratio of 6 for 5 to its eligible stakeholders as of the record date of October 24, 2024.
The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 24.75 cr. for adjustment of unsecured loans from promoters, Rs. 15.00 cr. for working capital, and Rs. 8.90 cr. for general corporate purposes.
The issue is self-managed by the company itself, and Venture Capital and Corporate Investments Pvt. Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 11.44 cr. will stand enhanced to Rs. 25.16 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 90.57 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total income/net profit of Rs. 101.65 cr. / Rs. 1.37 cr. (FY22), Rs. 125.08 cr. / Rs. 2.16 cr. (FY23), and Rs. 123.95 cr. / Rs. 2.03 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 0.64 cr. on a total income of Rs. 30.24 cr. It marked almost static top and bottom lines for the reported periods. Total borrowings of Rs. 57.06 cr. as of March 31, 2024 raises alarm.
DIVIDEND POLICY:
The offer document is silent on its dividend policy. It has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 531153 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 4.60 on October 23, 2024, and opened on an ex-right basis at Rs. 4.21 on October 24, 2024. Since then, it has marked high/low of Rs. 4.95/ Rs. 3.78. The scrip last closed at Rs. 4.68 as of November 08, 2024. For the last 52 weeks' it has posted a high/low of Rs. 6.29 / Rs. 3.54.
The promoters' holding has been constant at 61.33% for the last three quarters ended September 30, 2024. The counter is well managed by vested interests above RI pricing.
Review By Dilip Davda on November 9, 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 Diligent Industries 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 Diligent Industries Rights Issue 2024 worth investing. The Diligent Industries Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Diligent Industries Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Diligent Industries Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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