Gujarat Toolroom RI review (May apply)

• The company lied low till FY22 and came in to action from FY23 onwards.
• 9M-FY24 it marked eye catching performance with bumper top and bottom line.
• It also surprised one and all with 100% interim dividend for FY24.
• Promoter's holding has been NIL as of March 31, 2024, that raise eyebrows.
• The RI appears lucratively priced compared to its recent faring on the exchange.
• Well-informed investors may park funds for the medium to long term.

ABOUT COMPANY:
Gujarat Toolroom Ltd. (GTL) Started in 1983 as a precision Toolroom with a technical collaboration with Schober AG Switzerland with the object of bringing world class injection mould technology to India. Later the Company got engaged in the business of trading of Silver Conductive Ink.

The Company has incorporated two a wholly owned subsidiary company one named as GTL GEMS DMCC in the region of United Arab of Emirates. The company will be engaged in the trading of diamond in UAE. Its aim is to provide excellent customer service. The second wholly owned subsidiary company named GUJARAT TOOLROOM ZAMBIA LIMITED in the region of Zambia. It aspires to become a leading export-focused company in gold exploration, mining, extraction and jewellery processing, adhering to responsible and environmentally friendly practices.

GTL's product profile includes traditional, contemporary and combination designs across jewellery lines, for special occasions such as weddings and festivals to daily wear jewellery for all ages, genders and across various price points. It has a dedicated design team, focused on developing new products and designs that meet customers' requirements. The company also customized jewellery for individual needs. As of the date of filing this offer document, it had 17 employees on its payroll.

The company kept shifting its focus on non-related business and posted spectacular performances ahead of this RI.

ISSUE DETAILS:
The company is coming out with a Right Issue (RI) of 61108960 equity shares of Re. 1 each at a fixed price of Rs. 8 per to mobilize Rs. 48.89 cr. The RI opens for subscription on June 14, 2024, and will close on July 12, 2024. The company is offering RI in the ratio of 11 shares for every 10 shares held to its eligible stakeholders as of the record date of June 05, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.35 cr. for this RI process, and from the net proceeds it will utilize Rs. 25.50 cr. for working capital, Rs. 12.00 cr. for investment in subsidiary for its working capital, and Rs. 11.04 cr. for general corporate purposes.

The issue is self-managed by the company and Cameo Corporate Services Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 5.56 cr. will stand enhanced to Rs. 11.67 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 93.33 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, the company has (on a consolidated basis) posted a total income of Rs. 2.42 cr. / Rs. 1.39 cr. (FAY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 17.51 cr. on a total income of Rs. 288.85 cr. Thus the company marked some activities in the recent financial periods.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. GTL has paid an interim dividend of 100% in April 2024 for FY24. 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: 513337 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 16.53 on June 04, 2024, and opened on an ex-right basis at Rs. 12.67 on June 05, 2024. Since then, it has marked a high/low of Rs. 15.99 / Rs. 12.67. The scrip last closed at Rs. 15.99 as of June 13, 2024. For the last 52 weeks' it has posted a high/low of Rs. 45.97 / Rs. 8.16. The counter is currently under ESM: Stage 2.

NOTE: MY FAMILY HAS SMALL HOLDING IN THIS COMPANY AND WE ARE PARTICIPATING IN THE RI TO THE EXTENT OF ELIGIBILITY.

The promoters' holding turned NIL as of March 31, 2024, against 0.37% for the previous two quarters ended on December 31, 2023, and September 30, 2023. The counter is well managed by vested interest above the RI pricing to temp investors.

Conclusion / Investment Strategy

After lying dormant, the company turned into some action and in particular, surprised one and all with its activities for 9M-FY24 and announcing an interim dividend of 100% for FY24. The major concern is NIL holding of promoters, and the counter is being operated by vested interest. The recent traded price makes this RI a lucrative offer. Well-informed investors may park funds for the medium to long term rewards.

Review By Dilip Davda on June 13, 2024

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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Gujarat Toolroom Ltd. Review by Dilip Davda

The Gujarat Toolroom 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 Gujarat Toolroom Rights Issue 2024 worth investing. The Gujarat Toolroom Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Gujarat Toolroom Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Gujarat Toolroom Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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Gujarat Toolroom RI review (May apply)

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