Rushil Decor RI review (May apply)

• RDL is in the business of manufacturing and marketing decorative laminates and MDF boards.
• This is the 2nd Rights Issue from RDL since listing in 2011.
• This segment is highly competitive and fragmented.
• The company has posted growth in its top and bottom lines for the reported periods.
• This RI is at a discount of 44.69% to its last traded price of Rs. 292.90 as of April 27, 2023.
• Investors may consider parking funds with medium to long-term perspectives.

PREFACE:
In the year 2011, the Company made its maiden public issue of 56,43,750 Equity Shares at an issue price of Rs. 72/- per Equity Share aggregating to Rs. 40.64 cr. and consequently the Equity Shares were listed on BSE and NSE. It came with its 1st rights issue of 4977111 equity shares in 2020 in the ratio of 1 for 3 at a fixed price of Rs. 50 per share to mobilize Rs. 24.89 cr. Now it is coming out with its 2nd Right Issue with a lucrative price of Rs. 162 per share against the ongoing market price.

ABOUT COMPANY:
Rushil Décor Ltd. (RDL) is a flagship company of the Rushil group. It is engaged in the manufacturing and marketing of "VIR" brand decorative laminated sheets, medium-density fibre boards and poly vinyl chloride boards. RDL's plants are strategically located in Gujarat, Karnataka and Andhra Pradesh.

The Company has a brand presence and its brands "VIR LAMINATE", "VIR MDF", "VIR PROPLUS", "VIR MAXPRO", "VIR PRELAM MDF", "VIR PVC" and "VIR STUDDIO" are recognized and respected in the industry. It has created a nationwide network of branches & consignments and direct distributors/dealers across the country for marketing and distribution of Laminated Sheets, Medium Density Fibre Board and Poly Vinyl Chloride Foam Board. It currently exports its products to countries including Kenya, Kuwait, Qatar, South Africa, Sri Lanka, UAE, Nepal, Port of Spain, United States of America, Bahrain, Indonesia, Jordan, Malaysia, Mexico, Oman, Philippines, Russia, Saudi Arabia, Singapore, Thailand, Yemen, Sudan, Vietnam, Bangladesh, Ireland, etc.

As of December 31, 2022, it had 1085/ 02 distributors/dealers and 20/9 branches/consignments stockists for Laminated sheets/MDF Boards respectively. As of the said date, it had 763 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 6635421 equity shares of Rs. 10 each at a fixed price of Rs. 162 per share to mobilize Rs. 107.49 cr. The issue opens for subscription on May 02, 2023, and will close on May 12, 2023. It is offering RI in the ratio of 1 for 3 to eligible stakeholders as of the record date of April 13, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. RDL is spending Rs. 0.65 cr. for this RI process, and from the net proceeds, it will utilize Rs. 54.90 cr. for repayment/prepayment of certain loans, Rs. 42.30 cr. for working capital and Rs. 9.64 cr. for general corporate purposes.

Saffron Capital Advisors Pvt. Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue.

Post-RI, RDL's current paid-up equity capital of Rs. 19.91 cr. will stand enhanced to Rs. 26.54 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 429.98 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, RDL has posted a turnover/net profit of Rs.339.77 cr. / Rs. 13.72 cr. (FY21), and Rs. 625.58 cr. / Rs. 22.80 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 64.11 cr. on a turnover of Rs.625.53 cr. Thus it has marked growth in its top and bottom lines for the reported periods.

DIVIDEND POLICY:
The company has paid a dividend of 5% for the last three fiscals. 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: 533470 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 294.70 on April 12, 2023, and opened on an ex-right basis at Rs. 261.40 on April 13, 2023. Since then, it has marked a high/low of Rs. 295.75 / Rs. 227.30. The scrip last closed at Rs. 292.90 as of April 27, 2023. For the last 52 weeks, it has posted a high/low of Rs. 598.73 / Rs. 202.37.

The promoters' holding has been constant at 55.03% for the last three quarters ended on March 31, 2023. The counter is well managed above the offer price to lure investors.

Conclusion / Investment Strategy

RDL is in the highly competitive and fragmented segment of laminated sheets and MDF boards manufacturing and marketing. It has posted steady growth in its top and bottom lines for the reported periods of the offer document. Asa this RI is at a discount of around 44.69% based on its last traded price of Rs. 292.90, investors may consider investment for the medium to long-term rewards.

Review By Dilip Davda on April 27, 2023

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 ).

More Rushil Decor Limited RI Views / Analysis / Recommendations ...

Rushil Decor Limited Review by Dilip Davda

The Rushil Decor Rights Issue 2023 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 Rushil Decor Rights Issue 2023 worth investing. The Rushil Decor Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Rushil Decor Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Rushil Decor Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

Rushil Decor RI review (May apply)

Conclusion / Investment Strategy

Review Author

Read more about Rushil Decor Rights Issue 2023