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• The company is engaged in the business of ship recycling, trading in metals.
• It marked inconsistency in its financial performance for the reported periods.
• 9M-FY24 has posted bumper top and bottom lines, indicating prospects ahead.
• Well-informed investors may park moderate funds for the medium term.
ABOUT COMPANY:
VMS Industries Ltd. (VIL) was incorporated on December 2, 1991 with the object of carrying on the business of providing different kinds of consulting and information technology services. During 1992- 1994, it was engaged in computerization of land revenue records of Bhavnagar Municipal Corporation. Thereafter, in the year 1995-96 the Company undertook the assignment of computerization of Ration Cards and Ration Shops of Bhavnagar Municipal Corporation.
During the year 1994, it acquired a running Oxygen Plant operating in the name of "Varun Gases" in Sihor GIDC, Bhavnagar having an installed capacity of 65 cubic meters per hour. it was operating at full capacity and was supplying the gas produced at this unit to the various customers in and around Bhavnagar. The said plant was closed by the Company in the year 1997 as it became unviable on account of slowdown in the Ship Recycling Industry and advancement of technology in this area. The company sold oxygen plant in the year 2018.
The Ship Breaking Industry was revived in the year 2003-04 and therefore it decided to diversify activities. During the year 2004, Gujarat Maritime Board auctioned vacant plots and under open bid VIL has been allotted vacant Plot No. 160 at Alang-Sosiya Ship Breaking Yard admeasuring 1350 sq. meter. However, the Company could not start ship breaking activities due to change in policy for ship recycling plant, requiring higher size (2700 sq. mtrs) of plot and therefore VIL could not get permission for utilization of plot from GMB. Meanwhile, in the year 2007, the plot size was enlarged to 2700 sq. meter as per the instructions given by the Inter Ministerial Committee constituted by Hon. Supreme Court, by merging the adjoining Plot No. 159 and the Company was permitted to use the merged Plot No. 160M for a period of 5 years with effect from 19.01.2016 to 18.01.2021 vide agreement dated August 20, 2018. Subsequently, the Company has applied for the renewal permission and had also paid requisite fees to the GMB. Moreover, in the year 2022 size of the plot was increased from 2700 Sq. Mtr to 5400 Sq. Mtr. The ship-breaking facility received certifications from NK Class (Japan), and ISO certifications (9001, 14001 & 45001) from Bureau Veritas.
The Company has started making participation in various Bids to acquire factories for dismantling. In line with the same, the Company has participated in Bid and secured dismantling / cutting / sale of incomplete Ships and ship blocks lying at ABG shipyard, Dahej Shipyard weighing approximately 48000 MT valuing Rs.163.20 Crores plus GST from Welspun Corp Limited.
Presently the company is mainly engaged in the business activities of Ship Recycling, Trading of Various Metals and Asset Dismantling/Demolition.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 8000000 equity shares of Rs. 10 each at a fixed price of Rs. 35 per share to mobilize Rs. 28.00 cr. The RI opens for subscription on May 02, 2024, and will close on May 16, 2024. The company is offering RI in the ratio of 16 for 33 to its eligible stakeholders as of the record date of April 18, 2024. The company is asking full application money for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 2.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 18.50 cr. for working capital, and Rs. 7.00 cr. for general corporate purposes.
This RI is self-managed by the company itself, and Cameo Corporate Services Ltd. is the registrar to the issue.
Post-RI, company's current paid-up equity capital of Rs. 16.47 cr. will stand enhanced to Rs. 24.47 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 85.66 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company (on a consolidated basis) reported a total income/net profit of Rs. 163.14 cr. / Rs. 1.08 cr. (FY22), and Rs. Rs. 145.76 cr. / Rs. 2.50 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 4.93 cr. on a total income of Rs. 177.37 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: 533427 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 44.00 on April 16, 2024, and opened on an ex-right basis at Rs. 41.97 on April 18, 2024. Since then, it has marked a high/low of Rs. 48.60 / Rs. 40.50. The scrip last closed at Rs. 43.57 as of April 30, 2024. For the last 52 weeks' it has posted a high/low of Rs. 57.79 / Rs. 12.19.
The promoters' holding has been constant at 56.61% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on May 1, 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 VMS Industries 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 VMS Industries Rights Issue 2024 worth investing. The VMS Industries Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if VMS Industries Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in VMS Industries Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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