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• VNL is a nutraceutical focused biotechnology company.
• It marked losses for the reported periods and has minuscule operations.
• It is working on third party contract manufacturing model.
• The issue is at a negative P/E as it marked losses for all these years.
• Though this RI at a hefty discount to its last traded price, it is worth skipping as the counter is having restricted trading.
PREFACE:
The company came with its maiden SME IPO for BSE listing at a price of Rs. 46 per share in December 2019 and marked no operations till FY22. The IPO was for Rs. 7.23 cr. including an offer for sale of Rs. 1.23 cr. Aryaman group companies were the Lead Manager as well as the market maker for the company for this IPO. There appears to be the market operations to keep the counter in limelight to pave the way for this RI.
ABOUT COMPANY:
Valencia Nutrition Ltd. (VNL) is a Biotechnology Company with Nutraceuticals Focus. The Nutraceutical market is segmented into functional foods, beverages and dietary supplements. Present segment of production line is in the format of Beverages. The present focus of the Company is on Fortified Beverages under the brand names Bounce Super drinks and VITA FIZZ. Bounce Super drinks, the flagship brand of the Company, signifies an infusion of science, taste, and innovation. Guided by the principle that every sip should contribute to the vitality of its consumers, Bounce Super drinks strives to seamlessly blend health-conscious choices with delightful flavors. It stands as a beacon of ingenuity and progress.
With a foundation rooted in biotechnology, the Company explores uncharted territories of functional ingredients, seamlessly weaving them into beverages and other fun to consume nutritional products that cater to the diverse needs of modern lifestyles. Beyond creating products, Valencia Nutrition envisions an entire ecosystem that promotes holistic wellness, sustainability, and a sense of community. The journey of VNL and Bounce Super drinks is a testament to the power of innovation, dedication, and a relentless pursuit of excellence.
As the Company is Biotechnology Company, FSSAI Regulations, GST & Nuances of Beverage Market forms its ecology. It has contract manufacturers located at Gujarat, Tamil Nadu and Andhra Pradesh and VNL supplies almost 90% of its production straight from the Factories to Distributors in truckloads. The Company had not carried any business operations in the financial year 2021-2022 which results in nonoccurrence of any revenue from operations for the financial year ended March, 2022. As of the date of filing of RI documents, it had just 9 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 8378012 shares of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 21.78 cr. The issue opens for subscription on March 15, 2024, and will close on April 12, 2024 (revised extended date). The company is offering RI in the ratio of 15 for 10 to its eligible stakeholders as of the record date of March 07, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 1.35 cr. for this RI process, and from the net proceeds, it will utilize Rs. 3.00 cr. for adjustment of unsecured loans from promoters, Rs. 12.35 cr. for working capital, and Rs. 5.08 cr. for general corporate purposes.
This issue is self-managed by the company and Bigshare Services Pvt. Ltd. is the registrar of the issue.
Post-RI, its current paid-up capital of Rs. 5.59 cr. will stand enhanced to Rs. 13.96 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 36.31 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total revenue/net profit/ - (loss) of Rs. 0.004 cr. / Rs. - (0.66) cr. (FY22), and Rs. 1.46 cr. / - (1.26) cr. (FY23). For H1 of FY24 ended on September 30, 2024, it posted a loss of Rs. - (0.55) cr. on a total revenue of Rs. 0.65 cr. Thus the company has been incurring losses on minuscule top lines for the reported periods.
As of September 30, 2023, its current paid-up equity capital of Rs.5.59 cr. has negative reserves of Rs. - (6.80) cr.
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: 542910 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 96.00 on March 04, 2024, and opened on an ex-right basis at Rs. 56.00 on March 11, 2024. Since then, it has marked a high/low of Rs. 56.00 / Rs. 56.00. The scrip last closed at Rs. 56.00 as of March 11, 2024. For the last 52 weeks' it has posted a high/low of Rs. 56.00 / Rs. 11.82.
The promoters' holding has been constant at 63.88% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to lure investors.
Trading is restricted on this counter on account of GSM: Stage 4.
Review By Dilip Davda on March 14, 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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. 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 Valencia Nutrition 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 Valencia Nutrition Rights Issue 2024 worth investing. The Valencia Nutrition Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Valencia Nutrition Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Valencia Nutrition Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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