Anjani Portland RI review - (May apply)

•    APCL is the Chettinad group cement manufacturing arm.
•    It suffered a severe setback for H1 of FY23 making this RI aggressively priced. 
•    Cement sector is poised for bright prospects ahead.
•    Well-informed investors may consider investing in this RI for long-term rewards.
 
ABOUT COMPANY:
Anjani Portland Cement Ltd. (APCL) is a part of the Chettinad group, a business house in South India with diverse businesses including cement manufacturing, transportation, logistics and supply chain management, construction, healthcare and education.

APCL is a small-sized cement manufacturing company in South India. It commenced its cement manufacturing operations in 1999 with an installed production capacity of 1,98,000 MT per annum with one production plant. As on September 30, 2022, APCL operated two production lines in the Cement Plant with an installed production capacity of 11,60,000 MT per annum. The Company manufactures Ordinary Portland Cement ("OPC"), Portland Pozzolana Cement ("PPC"), and Composite Cement ("CC"). This classification of cement is based on its composition which ultimately determines its usage. Within OPC there are different grades of cement based on the minimum compressive strength gained by the cement-sand mortar mix in 28 days' time. The company manufactures 53 grade and 43 grade in OPC.

The principal raw materials used by it for the cement manufacturing process are limestone, gypsum, iron ore, laterite and fly ash. As of date, it operates two limestone mines situated in Chintalapalem Village, in the Suryapet District, with reserves (including probable reserves) of approximately 34 million tonnes. In addition, the company is in the process of obtaining the necessary approvals for a third limestone mine, which will increase its available reserves (including probable reserves) to approximately 44 million tonnes. The mines are situated near its Cement Plant.

ISSUE DETAILS:
To part finance its need for repayment/prepayment of intercorporate deposits (Rs. 249.00 cr.), APCL is offering 12642848 equity shares of Rs. 10 each at a fixed price of Rs. 197 per share as a rights issue to eligible shareholders who were holding shares as of the record date of December 16, 2022. The company is issuing RI in the ratio of 1 for 2 and mulls mobilizing Rs. 249.06 cr. The issue opens for subscription on December 30, 2022, and will close on January 19, 2023. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE and NSE. APCL is spending Rs 0.06 cr. for this RI process. 

The issue is solely lead managed by Saffron Capital Advisors Pvt. Ltd., and KFin Technologies Ltd. is the registrar of the issue. 

Post RI, APCL's current paid-up equity capital of Rs. 25.29 cr. will stand enhanced to Rs. 37.93 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 747.19 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last fiscal, APCL has (on a consolidated basis) posted a turnover/net profit of Rs. 804.36 cr. / Rs. 41.99 cr. (FY22).

For the first half of FY23 ended on September 30, 2022, reported a (loss) of Rs. - (27.44) cr. on a turnover of Rs. 378.79 cr.  As of September 30, 2022, its current paid-up equity capital of Rs. 25.29 was supported by free reserves of Rs. 258.43 cr. against Rs. 293.03 cr. for FY22 end.

Considering losses for H1 of FY23, the RI appears aggressively priced. 

DIVIDEND POLICY:
The company is a dividend-paying company, APCL last paid a dividend of 30% for FY22. It will adopt a prudent dividend policy post-listing of RI based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 518091 (FV Rs. 10).
The scrip last closed at Rs. 240.85 on December 15, 2022, as cum-right and opened at Rs. 229.80 as ex-right on December 16, 2022. Since then it has marked a high/low of Rs. 233.00 / Rs. 196.40 till this date of the review. It last closed at Rs. 199.40 as of December 23, 2022, and has marked the last 52 weeks' high/low of Rs. 319.40 / Rs. 170.62. The promoter's holding has been at 75.00% for the last three quarters. The counter is well managed around and above RI pricing with thin volumes to lure investors.