• 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.
ABOUT COMPANY:
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.
ISSUE DETAILS:
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.
FINANCIAL PERFORMANCE:
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.
DIVIDEND POLICY:
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.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: AJOONI (FV Rs. 2).
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.
Review By Dilip Davda on December 5, 2022
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
