Sadhana Nitro RI review (Apply)

• The company is engaged in manufacturing and marketing of basic organic chemicals and pharma intermediates.
• It has marked steady growth in its top and bottom lines for the reported periods.
• It will use RI funds for acquisition of land for proposed expansion.
• The RI is attractively priced at 91% discount to its last traded price.
• It's a not to miss opportunity for investors.

ABOUT COMPANY:
Sadhana Nitro Ltd. (SNL) has been engaged in the manufacture of basic organic chemicals and Pharmaceutical & chemical intermediates used in various diverse industries. Its products serve diverse industries such as cosmetics, aerospace, agrochemicals, pharmaceuticals, epoxy resins, electronic chemicals, dyes, developers, military applications, adhesives, and para-aramid fiber for oil rigging. Its clientele includes various national and multinational companies like Mitsui Chemicals, Ricoh, Domtar, Clariant, BASF, Loreal, Bayer Crop, UPL, IPCA to name a few.

The company supplies products domestically and internationally, with major markets in Europe, Japan, the USA, South Korea, and others. Sadhana Nitro Chem Ltd. (SNCL) has strived for innovation and has worked hard to become an industry leader since its establishment. SNL was recognized as a 2-Star Golden Export House, SNL has made its mark on the global stage, with about 70% to 80% of its products exported to international markets.

In 2021, SNL was honored under the Production Linked Incentive (PLI) scheme for producing 36,000 Tons Per Annum (TPA) of Para Amino Phenol (PAP), a key ingredient in the production of paracetamol and other essential pharmaceuticals. Its commitment to quality and social responsibility is further reinforced by its adherence to multiple ISO certifications. These certifications highlight SNL's dedication to maintaining the high operational standards and environmental sustainability. The offer document is silent on its employees' strength.

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 82352818 equity shares of Rs. 1 each at a fixed price of Rs. 6.06 per share to mobilize Rs. 49.91 cr. The RI opens for subscription on September 20, 2024, and will close on October 01, 2024. The company is offering RI in the ratio of 1 for 3 to its eligible stakeholders as of the record date of September 13, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE, NSE. The company is spending Rs. 0.39 cr. for this RI process, and from the net proceeds, it will utilize Rs. 49.52 cr. for acquisition of land.

The issue is self-managed by the company and Link Intime India Pvt. Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 24.71 cr. will stand enhanced to Rs. 32.94 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 199.62 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 145.13 cr. / Rs. 3.18 cr. (FY23), Rs. 194.01 cr. / Rs. 4.08 cr. (FY24).

DIVIDEND POLICY:
The offer document is silent on its dividend policy. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. However, as per BSE Website, it has paid a dividend of 15%for the last three fiscals.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 506642 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 81.29 on September 12, 2024, and opened on an ex-right basis at Rs. 60.99 on September 13, 2024. Since then, it has marked a high/low of Rs. 74.00 / Rs. 59.85. The scrip last closed at Rs. 65.15 as of September 19, 024. For the last 52 weeks' it has posted a high/low of Rs. 84.74 / Rs. 37.69. The counter is currently under ASM ST: Stage 1.

The promoters' holding has been constant around 65.5% for the quarter ended June 30, 2024. The counter is witnessing activities following RI and has been performing well.

Note: I am holding small lot in this company for long term and will apply for eligible quota of RI.

Conclusion / Investment Strategy

The company is in the business of manufacturing and marketing of organic chemicals and pharma intermediates with a global reach. It has posted growth for the reported periods in top and bottom lines. The RI is at a discount of around 91% to its last traded price and making it a not to miss opportunity for investors.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on September 19, 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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Sadhana Nitrochem Limited Review by Dilip Davda

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

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