Ajooni Bio RI review (May apply)

Ajooni Biotech Limited Logo

•    ABL is operating in a highly competitive and fragmented segment. 
•    It has posted inconsistency in its financial performance for the reported periods. 
•    Based on its recent earnings, the issue is fully priced. 
•    Well-informed, cash surplus risk seekers may consider parking funds.
Ajooni Biotech Ltd. (ABL) is engaged in manufacturing, producing, processing, and supplying Cattle feed, Nutrients related to cattle feed, and manufacturing & production of Animal health care supplements. It is registered with the Department of Industries, Govt. of Punjab as Small Scale Industry (SSI) and also registered with the Department of Dairy Development, Govt of Punjab. The company is a research and development-focused animal healthcare solution company dedicated to improving the productivity of dairy farmers of sustainability increase milk yield. 

India's 1st ZED-certified cattle feed with ISO 9000:2015 and also registered with the Bureau of Indian Standards (BIS) and manufacturing ISI Mark Animal Feed. ABL is using the most modern technologies for all its operations such as ERP, and PLC systems to control the production of the most effective logistic systems. It has entered into an exclusive agreement with IFFCO KISAN for the supply of calcium on a PAN India Basis in addition to Balinee Milk Producer Company Limited, Harit Pradesh Milk Producer Company Limited, Paras Enterprises and Saahaj Milk Producer Company Limited for manufacturing of Cattle feed and Distribution of Cattle feed and feed supplements in the states of Punjab, Himachal Pradesh, Jammu & Kashmir, Haryana, Rajasthan, and western Uttar Pradesh. 

It focuses to leverage capabilities to develop cost-effective solutions to improve animal health and productivity. The company manufactures cost-effective feed & supplements under its own brand name "AJOONI". For Marketing its own brand in the Market, it has a strong professional team that covers the area of Punjab, Haryana, UP, etc.

To meet its funding needs for working capital (Rs. 21.77 cr.), and general corporate purpose (Rs. 7.00 cr.), ABL is offering a Rights issue (RI) in the ratio of 29 shares for every 30 shares held by the eligible stakeholders as of the record date of November 25, 2022. The company mulls raising Rs. 29.02 cr. post entire process for this RI is over for the issuance of 48360313 equity shares of Rs. 2 each at a fixed price of Rs. 6 per share. On application full amount is to be paid for the number of shares applied. The issue opens for subscription on December 07, 2022, and will close on December 15, 2022. Post allotment, shares will be listed on NSE. ABL is spending Rs. 0.25 cr. for this RI process. 

The issue is solely lead-managed by Navigant Corporate Advisors Ltd. and Cameo Corporate Services Ltd. is the registrar of the issue.

Post-RI, ABL's current paid-up equity capital of Rs. 10.01 cr. will stand enhanced to Rs. 19.68 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 59.03 cr. 

On the financial performance front, for the last two, ABL has posted a turnover/net profit of Rs. 51.06 cr. / Rs. 0.37 cr. (FY21) and Rs. 74.08 cr. / Rs. 1.05 cr. (FY22). 

As per unaudited results filed with the exchange, ABL has earned a net profit of Rs. 0.48 cr. on a turnover of Rs. 22.61 cr. for H1 of FY23 against Rs. 0.67 cr. / Rs. 34.26 cr. respectively for the previous corresponding period.  Thus the company has been reporting inconsistency in its top and bottom lines for the reported periods. 

The company has not declared any dividends in the reported financial periods and will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 7.75 on November 24, 2022, and opened on an ex-right basis at Rs. 7.95 on November 25, 2022. Since then, it has marked a high/low of Rs. 8.30 / Rs. 7.20. It last closed at Rs. 7.70 on December 05, 2022. The scrip has posted the last 52 weeks' high/low of Rs. 15.06 / Rs. 5.44. This indicates that the counter is well-operated and kept above the RI pricing to lure investors. Promoters' holding has declined from 52.62% as of June 30, 2022, to 32.41% as of September 30, 2022, which raises concern.

Conclusion / Investment Strategy

Based on its recent financial performance, the issue appears fully priced. It has shown inconsistency in its top and bottom lines. Promoters’ holding declined from 52.62% to 32.41% in Sept. 22 quarter which raises major concern. The counter is well-managed above the RI price to lure investors. Well-informed, cash surplus risk seekers may consider investing in this fully priced offer.

Review By Dilip Davda on Dec 5, 2022

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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

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.

Email: dilip_davda@rediffmail.com

More Ajooni Biotech Limited RI Views / Analysis / Recommendations ...

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