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• SFL is primarily engaged in the refining of salt with small projects for power generation.
• It is now diversifying into hospitality segment to establish resorts in and around Rajasthan.
• Its recent financial performance is not in line with the asking price.
• The counter is well operated and is quoting at a highly manipulated price.
• Well-informed/cash surplus investors may park funds for the medium to long term rewards.
ABOUT COMPANY:
Spectrum Foods Ltd. (SFL) was incorporated on February 7,1994 with the express object to refine salt to a very high degree of purity. The sophisticated Principles of chemical engineering used by the Company are the same as favored by the leading Salt Refineries. It is a Saboo Sodium group company.
A stalwart of innovation since 1994. Ranging from Salt Refinery to B2B excellence, SFL's enduring commitment extends to renewable energy and hospitality, setting unwavering standards of quality. Since 1994, its unwavering commitment to innovation and industry leadership began with an ambitious goal: establishing North India's largest Salt Refinery. Today, as a premier B2B Salt and Spices Manufacturer, it continues setting benchmarks for excellence. Company's dedication to sustainability is evident through a 400kWh captive solar power plant and a 1.5 MW Suzlon Windmill in M.P. with 25 years long term PPA at most attractive rates. Furthermore, its journey expands into impactful hospitality projects.
The Company has been granted permission to setup a 185 rooms resort at Pushkar, Rajasthan. Land for the same has been acquired and converted into hotel usage. Further the Company plans to setup resorts at major tourist locations in future. Rajasthan is going to be a major tourism hub in the times to come and SFL plans to achieve full potential from the growth in Tourism and FMCG space.
Its resort, poised to be a sanctuary for detoxification, stress-relief, and soulful rejuvenation, is harmoniously integrated with its natural surroundings, offering a serene escape from the urban hustle. This venture takes the essence of personalized service to new heights, providing an oasis of tranquility, away from the bustling crowds. As of the date of filing this offer document, it had 46 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 19393544 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 38.79 cr. The RI is opening for subscription on April 08, 2024, and will close on April 22, 2024. The company is offering RI in the ratio of 4 for 1 to its eligible stakeholders as of the record date of March 27, 2024. Only 50% i.e. Rs. 10 is to be paid on application per share for the number of shares applied. The balance in one or more subsequent calls as determined by the company from time to time. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.62 cr. for this RI process and from the net proceeds, it will utilize Rs. 29.64 cr. for working capital, and Rs. 8.53 cr. for general corporate purposes.
The issue is self-managed by the company and Beetal Financial & Computer Services Pvt. Ltd. is the registrar to the issue. GYR Capital Advisors Pvt. Ltd. is the advisor to the issue.
Post-RI company's current paid-up equity capital of Rs. 4.85 cr. will stand enhanced to Rs. 24.24 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 48.48 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, the company has reported a total revenue/net profit/ - (loss) of Rs. 16.36 cr. / Rs. -(0.25) cr. (FY22), Rs. 15.82 cr. / Rs. 0.38 cr. (FY23), and for 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 7.29 cr. on a total revenue of Rs. 15.54 cr. The bumper profits reported for3Qs of FY24 not only raises eyebrows, but also concern over its sustainability. For 3Qs the company marked good performance on y-o-y basis, but with final quarter adjustments as it expressed lower net for FY23, similar may happen for FY24.
Perhaps its hospitality segment diversion may bring some rewards, if all goes well.
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: 531982 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 71.47 on March xx, 2024, and opened on an ex-right basis at Rs. 28.26 on March 27, 2024. Since then, it has marked a high/low of Rs. 40.97 / Rs. 26.11. The scrip last closed at Rs. 40.97 as of April 05, 2024. For the last 52 weeks' it has posted a high/low of Rs. 40.97 / Rs. 17.34. The counter appears to have been manipulated to pave the gigantic rights issue and lure investors. The scrip is currently under ASM ST: Stage 1.
The promoters' holding has been constant around 42.02% for the last three quarters ended with December 31, 2023.
Review By Dilip Davda on April 6, 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 Spectrum 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 Spectrum Foods Rights Issue 2024 worth investing. The Spectrum Foods Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Spectrum Foods Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Spectrum Foods Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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