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• RIL is engaged in irrigation system-related business.
• It has started showing growth in its top and bottom lines for the reported periods.
• Lower promoters' holding of 38.27% remains the concern.
• The RI appears reasonably priced.
• Investors may consider an investment with medium to long-term perspectives.
ABOUT COMPANY:
Rungta Irrigation Ltd. (RIL) is primarily engaged in the activity of Manufacturing, Designing, Assembling, and Marketing Sprinkler Irrigation systems. The product range of the company includes Sprinklers, Drip Irrigation systems, Aluminium, Polyvinyl chloride (PVC), and High-density polyethylene (HDPE) pipes and Fountains. The company has established a strong dealership network with branches across the country.
Starting with its core competence in the area of Irrigation systems, it has now diversified into various other related areas and has established its name in the industry with its countrywide presence. Today, the group has under its umbrella companies which are Mining, Irrigation, Steel, Financing, and International business.
The Company offers products based on the world's best and most up-to-date technologies. The company has three decades of standing in the Irrigation industry with a tremendous amount of goodwill built over these years. As of December 31, 2021, it has 60 permanent employees on its payroll.
ISSUE DETAILS:
To part finance its need for repayment of the loan (Rs. 10.00 cr.), working capital (Rs. 1.02 cr.), and general corporate purposes (Rs. 1.00 cr.), RIL is coming out with a rights issue (RI) of 11070125 equity shares of Rs. 10 each at a fixed price of Rs. 11 per share to mobilize Rs. 12.18 cr. The company is offering 1.25 shares for every 1 share held as of November 11, 2022, to eligible shareholders. The issue opens for subscription on December 09, 2022, and will close on December 15, 2022. Applicants have to pay Rs. 3 per share on application and the rest on one or more calls by the company from time to time. The issue is self-managed by the company while Beetal Financial & Computer Services Pvt. Ltd. is the registrar of the issue. Post allotment, shares will be listed on BSE. RIL is spending Rs. 0.16 cr. for this RI process.
Post issue, RIL's current paid-up equity capital of Rs. 8.86 cr. will stand enhanced to Rs. 19.93 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 21.92 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, RIL has posted a turnover/net profit of Rs. 48.07 cr. / Rs. 0.55 cr. (FY21), and Rs. 71.87 cr. / Rs. 1.28 cr. (FY22).
As per the unaudited results submitted to the exchange, it earned a net profit of Rs. 0.46 cr. on a turnover of Rs. 21.36 cr. for Q1 of FY23 ended on June 30, 2022. Thus it has started reporting growth in its top and bottom lines.
DIVIDEND POLICY:
The company paid a dividend of 10% in May 2000 and thereafter it skipped following poor performance. It will adopt a prudent dividend policy post-listing of RIs, based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 530449 (FV Rs. 10).
The scrip last closed at Rs. 47.65 on cum-right basis as of November 10, 2022, and opened at Rs. 28.65 on an ex-right basis on November 11, 2022. Since then it has posted a high/low of Rs. 31.55 / Rs. 27.00. The scrip last closed at Rs. 26.60 as of December 06, 2022. It has marked the last 52 weeks' high/low of Rs. 31.55/12.20. For the last three quarters ended on September 30, 2022, the promoter's holding remained the same at 38.27%.
Review By Dilip Davda on December 6, 2022
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 Rungta Irrigation Rights Issue 2022 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 Rungta Irrigation Rights Issue 2022 worth investing. The Rungta Irrigation Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Rungta Irrigation Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Rungta Irrigation Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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