Akshar Spintex RI review - (May apply)

•    The company is engaged in manufacturing and marketing of cotton yarn of various counts.
•    It posted inconsistency in its top and bottom lines for the last three fiscals. 
•    Declining promoter's holding raises concern. 
•    Well-informed investors may park moderate funds for long term considering ongoing fancy for textile segment.

ABOUT COMPANY:
Akshar Spintex Ltd. (ASL) is engaged in manufacturing of cotton yarn. It manufactures 100% cotton yarn which include combed, semi combed and carded yarn. The company has installed a capacity of total 24,480 spindle. Technology is a crucial aspect of the cotton yarn industry. The level of advancement determines the productivity of machines and labor, which in turn, determines the production and profitability of the Company. Its technical team is equipped with modern spinning technology and processing techniques by virtue of which it is able to ensure quality yarn.

The company focuses on producing quality product to increase customer satisfaction and develop a positive brand image in the industry. As of March 31, 2024, it had 204 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 487480500 equity shares of Re. 1 each at par value to mobilize Rs. 48.75 cr. The RI is opening for subscription on September 09, 2024, and will close on September 30, 2024. The company is offering RI in the ratio of 13 for 8 to its eligible stakeholders as of the record date of August 23, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.35 cr. for this RI process and from the net proceeds, it will utilize Rs. 3.46 cr. for repayment of certain borrowings, Rs. 33.00 cr. for working capital, and Rs. 11.94 cr. for general corporate purposes.

The issue is self-managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, it's current paid-up equity capital of Rs. 30.00 cr. will stand enhanced to Rs. 78.75 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 78/.75 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 175.57 cr. / Rs. 7.02 cr. (FY22), Rs. 137.92 cr. / Rs. - (2.76) cr. (FY23), and Rs. 177.91 cr. / Rs. 3.46 cr. (FY24). It posted inconsistency in its top and bottom lines for the reported periods. 

DIVIDEND POLICY:
The company has declared a dividend of 1% for FY24. 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: 541303 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.21 on August 22, 2024, and opened on an ex-right basis at Rs. 1.60 on August 23, 2024. Since then, it has marked a high/low of Rs. 2.10 / Rs. 1.59. The scrip last closed at Rs. 1.80 as of September 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 4.42 / Rs. 1.28. 

The promoters' holding has declined to 11.62% for the quarter ended with June 30, 2024 against 15.23% for period ended February 26, 2024. Reduced promoter's holding raises concern. The counter is well managed above the par value to lure investors.