Hindware Home RI review (May apply)

• The company is engaged in the business of manufacturing and marketing consumer appliances products, building products, water and room heaters.
• It marked declining trends in its top and bottom lines for the reported periods.
• The RI at an approx. discount of around 27% to its latest traded price appears fully priced.
• The company is operating in a highly competitive and fragmented segment.
• Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Hindware Home Innovation Ltd. (HHIL) is the first resulting company post demerger scheme of AAGI Greenpac Ltd., while Hindware Ltd. is the second resulting company. The demerger transaction took place in April 2018. It is a prominent player in the building products and consumer appliances segment in India. It is engaged in the manufacturing, marketing and distribution of a diverse portfolio products, serving both residential and commercial segments.

Its operations are structured across primary business segments i.e. Consumer Appliances Business, Building products and water heater/room heater under its JV.

As of June 30, 2024, it had 373 employees on its payroll and additional 99 contract labourers in various departments.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 11349962 equity shares of Rs. 2 each at a fixed price of Rs. 220 per share to mobilize Rs. 249.70 cr. The RI opens for subscription on November 07, 2024, and will close on November 22, 2024. The company is offering RI in the ratio of 119 for 758 to its eligible stakeholders as of the record date of October 25, 2024.

The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.56 cr. for this RI process, and from the net proceeds, it will utilize Rs. 98.00 cr. for fresh loans lending to Hindware Ltd., a subsidiary for repayment/prepayment of their working capital loans, Rs. 151.14 cr. for repayment/prepayment of certain borrowings availed by the company.

The issue is solely lead managed by Finshore Management Services Ltd., and Cameo Corporate Services Ltd. is the registrar to the issue, while Maheshwari Datamatics Pvt. Ltd. is the registrar to the company.

Post-RI, company's current paid-up equity capital of Rs. 14.46 cr. will stand enhanced to Rs. 16.73 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 1840.22 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has (on a consolidated basis) posted a total income/net profit of Rs. 2907.90 cr. / Rs. 66.46 cr. (FY23), and Rs. 2837.19 cr. / Rs. 36.76 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 0.50 cr. on a total income of Rs. 612.27 cr. The company posted declining trends for its top and bottom lines for the reported periods, that remains major concern. Many litigations against the group companies also hints at alerts.

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It paid a final dividend of 20% in August 2024 and September 2023. It will adopt a prudent dividend policy based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 542905 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 332.90 on October 24, 2024, and opened on an ex-right basis at Rs. 314.95 on October 25, 2024. Since then, it has marked high/low of Rs. 314.95 / Rs. 279.85. The scrip last closed at Rs. 301.30 as of November 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 528.95 / Rs. 269.98.

The promoters' holding has been constant at 51.32% for the last three quarters ended September 30, 2024. The counter is well managed above RI pricing. Based on its market price movements, the RI appears to be lucratively priced at approx. 27% discount.

Conclusion / Investment Strategy

The company is engaged in the manufacturing and marketing of consumer appliances, building products, water/room heaters which is highly competitive and fragmented segment. It marked declining trends in its top and bottom lines for the reported periods. Based on its recent financial trends, the RI appears fully priced though it is at a discount of around 27% based on its last traded price. Well-informed/cash surplus investors may park moderate funds for long term.

Review By Dilip Davda on November 6, 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 ).

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

Comments

Add a public comment...

Hindware Home RI review (May apply)

Conclusion / Investment Strategy

Review Author

Read more about Hindware Home Innovation Rights Issue 2024

Comments