Arunjyoti Bio RI review - (May apply)

•    The company is operating in a highly competitive and fragmented segment of beverages bottles. 
•    Its financial performance so far has been non-illusive and minuscule.
•    Eight-fold rise in post-RI equity base indicates servicing issues. 
•    Well-informed/cash surplus investors may park moderate funds for long term rewards.

ABOUT COMPANY:
Arunjyoti Bio Ventures Ltd. (ABVL) (erstwhile known as Century 21st Portfolio Ltd., is a co-packer and a trusted name in the segment. Its co-packaging business is a specialized packaging company helping its clients in packaging the manufactured goods into their final selling form to the common public or wholesaler. 

The company focuses on understating the importance of maintaining the integrity of its MNC partners brand and the demand. It currently works for a multinational beverages company. The beverage packaging market is highly fragmented with many players around, thus it has a highly competitive environment. The company is trying hard to keep its offering cost effective and competitive advantage. 

As on the date, it had 136 employees on its payroll, and it operating from its two plants, 1 at Jangaon -Telangana and 1 at Kovvur -Andhra Pradesh. 

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 16567200 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 33.13 cr. The issue opens for subscription on March 26, 2024, and will close on April 08, 2024. The company is offering RI in the ratio of 8 for 1 to its eligible stakeholders as of the record date of March 12, 2024. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.93 cr. for this RI process, and from the net proceedings, it will utilize Rs. 19.76 cr. for conversion of unsecured loans from promoters, Rs. 4.33 cr. for working capital, and Rs. 8.11cr. for general corporate purposes. 

The issue is solely lead managed by Bajaj Capital Ltd. and Venture Capital and Corporate Investments Pvt. Ltd. is the registrar of the issue. 

Post-RI, company's current paid-up equity capital of Rs. 2.07 cr. will stand enhanced to Rs. 18.64 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 37.28 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 5.52 cr. / Rs. 0.07 cr. (FY21), Rs. 3.25 cr. / Rs. 0.06 cr. (FY22), and Rs. 1.74 cr. / Rs. 0.12 cr. (FY23).  For H1 of FY24 ended on September 30, 2023, it posted a loss of Rs. - (1.33) cr. on a total income of Rs. 6.02 cr. Thus while it marked declining trends in its top line, it posted mixed trends for the bottom line. What is shocking that it incurred huge loss on a bumper top line for H1 of FY24. Eight-fold jump in its equity capital post-RI may face servicing issue going forward. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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: 530881 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 246.30 on March 11, 2024, and opened on an ex-right basis at Rs. 47.30 on March 12, 2024. Since then, it has marked a high/low of Rs. 60.85 / Rs. 47.30. The scrip last closed at Rs. 56.90 as of March 22, 2024. For the last 52 weeks' it has posted a high/low of Rs. 60.85 / Rs. 23.49. 

The promoters' holding has been constant at 48.97% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price with vested interest parties to tempt investors to subscribe this RI which appears lucratively priced based on its last traded (but well managed) price. Financial working is not supportive for the asking price.