Oriental Trimex RI review (Avoid)

• The company is engaged in processing marble and marketing it globally.
• It has incurred losses for the reported periods of the offer document.
• The counter is well operated above the RI price by vested interests to temp investors.
• There is no harm in skipping this "High Risk/Low Return" offer at a premium from a loss making company.

ABOUT COMPANY:
Oriental Trimex Ltd. (OTL) is presently operating with its own Sales and Marketing Outlets, including factories in Greater Noida, to meet the growing demand for imported Marble. The company is the only processor and supplier of Imported Marble having a PAN India Presence. The company has a team of qualified and experienced Marketing staff at all its locations headed and controlled by the Management.

Oriental's marble processing facilities are based at Greater Noida near Delhi in the National Capital Region. These facilities are fully integrated processing facilities equipped with state-of-the-art machinery. The Company also imports semi processed marble slabs, apart from sourcing slabs and blocks indigenously. Among the natural stones, marble and granite are used for the flooring purposes in residential and commercial projects. Granites mainly used in countries where the climate is cold and marble is used where the countries have hot climatic conditions and therefore, India has market for export of granite whereas marbles are used in India as well as have export potential. As of the date of filing this offer document, it had 17 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 44104359 equity shares of Rs. 10 each at a fixed price of Rs. 11.00 per share to mobilize Rs. 48.52 cr. The RI opens for subscription on September 19, 2024, and will close on September 27, 2024. The company is offering RI in the ratio of 3 for 2 to its eligible stakeholders as of the record date of September 05, 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. 0.36 cr. for this RI process, and from the net proceeds, it will utilize Rs. 33.33 cr. working capital, Rs. 4.00 cr. for repayment of certain unsecured loans, Rs. 4.38 cr. for Capex on machinery for marble block, Rs. 2.73 cr. for development of quarry of JET BLACK Granite in Odisha, Rs. 1.88 cr. for capex on showroom-cum-warehouse construction, and Rs. 1.84 cr. for general corporate purposes.

The issue is self-managed by the company and Beetal Financial & Computer Services (P) Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 29.40 cr. will stand enhanced to Rs. 73.51 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 80.86 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit/ - (loss) of Rs. 18.53 cr. / Rs. - (5.87) cr. (FY22), Rs. 8.71 cr. / Rs. - (4.32) cr. (FY23), Rs. 3.65 cr. / Rs. - (6.50) cr. (FY24). Thus it has been marking losses for the last three fiscals.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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: 532817 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 17.50 on September 04, 2024, and opened on an ex-right basis at Rs. 13.21 on September 05, 2024. Since then, it has marked a high/low of Rs. 16.90 / Rs. 13.21. The scrip last closed at Rs. 16.90 as of September 18, 024. For the last 52 weeks' it has posted a high/low of Rs. 16.90 / Rs. 4.86. The counter is currently under ESM: Stage 2.

The promoters' holding has been constant at 27.24% for the last three quarters ended with June 30, 2024. The counter is well managed by the vested interest counters and making this offer very attractive.

Conclusion / Investment Strategy

The company is in the business of processing and marketing of various types of marbles and stones. It has been incurring losses for the last three fiscals. This is a “High Risk/Low Return” bet at a premium from a loss making company. The counter is well operated and managed above the RI price to tempt investors. Higher equity base post RI may witness its servicing issue. There is no harm in skipping it.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on September 18, 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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Oriental Trimex Ltd. Review by Dilip Davda

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

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Oriental Trimex RI review (Avoid)

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