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• MFL is primarily engaged in the processing and marketing Basmati Rice.
• It has added other agro products for packaging and marketing.
• There appears to be some non-compliance on the filing of the offer documents.
• The margins posted by the company from FY22 onwards raise eyebrows.
• Well-informed investors may follow switch over operations to park moderate funds.
PREFACE:
This RI is the height of non-compliances, as its Rights Issue (RI) Letter of Offer (LoO) dated March 19, 2024 was made available on BSE Web only on the opening day morning. It was missing on designated exchange, company web till previous eve. Is this kind of compliances being permissible? As this offer document is filed by the company itself, advisors to the issue have failed on compliances, it appears. What is more, the first draft LoO was filed in May 2023 which was withdrawn in June 2023. It refiled revised RI Draft LoO in February 2024 and announcement of RI entitlement ad was made on March 12, 2024 with a notice date of March 11, 2024. But offer documents were missing from the concerned websites till this morning. BSE Notice for RI terms was filed on March 20, 2024. On MSEI website when cross checked, this company was not found on their website. As per May 23 draft RI document, PNB Investment Services Ltd. and GYR Capital Advisors Pvt. Ltd. were the joint lead managers, but as per revised draft RI document of February 24, these names were removed.
ABOUT COMPANY:
Mishtann Foods Ltd. (MFL) is engaged in the business of processing and packaging of fast moving consumer goods, such as Basmati Rice and Wheat, and marketing and selling of pulses and salt. Its prime focus is on unbranded Basmati Rice in the domestic markets. The company markets its raw Basmati Rice in the brand names of "Pristino" and "Snowflake", Basmati Rice in the brand names of "Mahabat" and "Shahryar", and steam Basmati Rice under the brand names of "Jacinth" and "Jasper".
The company sells its wheat under the name of "I Love Wheat" and new product of organic salt under the brand name of "Mishtann Rock Salt". It has its own warehouse in its manufacturing unit that takes care of storing. It also has godowns for storage purposes. The company has entered in manufacturing of grain based Ethanol and awaiting necessary approvals from the Government of Gujarat. It has also incorporated its wholly owned subsidiary at UAE to import Thai Rice and Jasmin Rice from Thailand.
As of December 31, 2023, it had 10 employees on its payroll. It also engages contract labourers as and when required.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 33212903 equity shares of Re. 1 at a fixed prie of Rs. 15 per share to mobilize Rs. 49.82 cr. The issue opens for subscription on April 02, 2024 (today) and will close on April 16, 202. The company is offering RI in the ratio of 1 for 31 to its eligible stakeholders as of the record date of March 20, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, the shares will be listed on BSE and MSEI (Metropolitan Stock Exchange of India Ltd.). MFL is spending Rs. 2.50 cr. for this RI process and from the net proceeds, it will utilize Rs. 36.92 cr. for working capital, and Rs. 10.40 cr. for general corporate purposes.
The issue is self-managed by the company and KFin Technologies Ltd. is the registrar of the issue.
Port-RI, company's current paid-up equity capital of Rs. 100 cr. will stand enhanced to Rs. 106.28 cr. While the RI is for 33212903 shares, how post-RI share capital will be up by 62812903 shares? This evaluation is based on the information available on page no. 80 of the RI documents. However, as noticed, its Capital structure table of page no. 88, shows its current paid-up equity capital is Rs. 102.96 cr. (1029600000 shares).
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit of Rs. 351.17 cr. / Rs. 0.30 cr. (FY21), Rs. 498.62 cr. / Rs. 29.28 cr. (FY22), and Rs. 650.43 cr. / Rs. 44.85 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 249.39 cr. on a total revenue of Rs. 942.86 cr.
The margins posted by the company from FY22 onwards raise eyebrows and concern over its sustainability going forward. Its trade receivables and its holding levels are at alarming level. (Refer Page 91 and 92).
DIVIDEND POLICY:
The company has paid dividend of 0.1% (FY21), 0.5% (FY22), and 0.2% (FY23). 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: 539594 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 18.18 on March 19, 2024, and opened on an ex-right basis at Rs. 17.98 on March 20, 2024. Since then, it has marked a high/low of Rs. 19.20 / Rs. 17.41. The scrip last closed at Rs. 18.56 as of April 01, 2024. For the last 52 weeks' it has posted a high/low of Rs. 26.37 / Rs. 7.05. The counter is currently under ASM LT: Stage 1.
The promoters' holding has been constant at 49.82% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on April 2, 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 Mishtann Foods 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 Mishtann Foods Rights Issue 2024 worth investing. The Mishtann Foods Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Mishtann Foods Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Mishtann Foods Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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