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• The wholesale trader of jewellery has now turned manufacturer of the jewellery on job-work basis.
• It posted inconsistency in its top and bottom lines for the reported periods.
• In a pre-issue period, it posted historic high net profit for FY24 that raise eyebrows.
• Though the RI appears lucrative considering a discount of around 54% on its last traded price, well-informed investors may park funds for the medium term.
PREFACE:
The company came with its maiden IPO worth Rs. 29.33 cr. in March 2019 at a price of Rs. 51 per share (FV Rs. 10), then it came with FPO in March 2021 at a price of Rs. 81 (FV Rs. 10) to mobilize Rs. 30.02 cr., and now it is coming with RI at a price of Rs. 5.85 (FV Re. 1) to mobilize Rs. 48.75 cr. in this month. Thus it has emerged as the visitor of primary market to fetch the funds for its plans. On the financial performance front, it has posted inconsistency and perhaps marked historic high bottom line for FY24, i.e. pre-RI period.
ABOUT COMPANY:
Ashapuri Gold Ornaments Ltd. (AGOL) was engaged in the business of wholesale trading of jewelry till March 2019. There after it started manufacturing the jewelries on job-work basis, based on in-house design or third-party design. The Company has started manufacturing of Jewelries in-house, with an aim to reduce the dependency on third-party manufacturers.
The Company started manufacturing operations from its owned premise at 501 and 502, Golden Signature, B/h Ratnam Building, Off C.G Road, Navrangpura, Ahmedabad - 380009 admeasuring 2194.02 sq. ft. It further expanded manufacturing operations and started its new manufacturing facility at Ashapuri Corporate House Swastik Cross Road to Navrangpura Bus Stand Road, Nr. Ganesh Plaza, Ahmedabad-380009, Gujarat, India, since 2021.
The Company has started manufacturing Jewelleries in house and reduce the dependence of getting jewelry manufactured on job work basis. The in-house designing of the jewellery and in house manufacturing helps the company to have better management and coordination of man and material, better utilization of labour force, better inventory management and quality control on the final products. On account of Own manufacturing unit, the Company has complied the stringent requirement norms of the known retail brand Jewellery show room. The Client list of the Company includes leading reputed jewellery retailer which are multinational well reputed and having very good network.
AGOL designs, manufactures and sells a wide range of gold, studded jewellery and other jewellery products across various price points. Its product portfolio includes Wedding Jewellery, Festive Jewellery, Rings, Chain, Earrings, Ear Chain, Nose-rings/Nose pins, Waist belts, Mangalsutra, Anklet, Zuda, Toe Ring, Pendant Set/ Pendant, Bracelet and Bangles. To keep pace with the latest trends in the market as well as to satisfy consumer requirements, the company continuously strives to develop new jewellery designs and themes. As of September 30, 2023, it had 60 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 83328666 equity shares of Re. 1 each at a fixed price of Rs. 5.85 per share to mobilize Rs. 48.75 cr. The RI has already opened for subscription today, i.e. May 08, 2024, and will close on May 27, 2024. The company is offering RI in the ratio of 1 for 3 to its eligible stakeholders as of the record date of April 18, 2024. The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 1.25 cr. for this RI process, and from the net proceeds, it will utilize Rs. 41.07 cr. for working capital, and Rs. 6.43 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, company's current paid-up equity capital of Rs. 25.00 cr. will stand enhanced to Rs. 33.33 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 194.99 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, the company has posted a total income/net profit of Rs. 117.64 cr. / Rs. 2.55 cr. (FY21), Rs. 163.96 cr. / Rs. 3.07 cr. (FY22), Rs. 158.14 cr. / Rs. 1.79 cr. (FY23), and Rs. 166.85 cr. / Rs. 7.43 cr. (FY24). It marked inconsistency in its top and bottom lines for the reported periods and the boosted margins for FY24 raise eyebrows and concern over its sustainability.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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: 542579 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 15.72 on April 16, 2024, and opened on an ex-right basis at Rs. 13.40 on April 18, 2024. Since then, it has marked a high/low of Rs. 14.99 / Rs. 13.00. The scrip last closed at Rs. 12.74 as of May 08, 2024, 2023. For the last 52 weeks' it has posted a high/low of Rs. 16.27 / Rs. 6.11.
The promoters' holding has been constant around 62+% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price by vested interests.
Review By Dilip Davda on May 8, 2024
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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.
About Dilip Davda
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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Ashapuri Gold Ornament Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Ashapuri Gold Ornament Rights Issue 2024 worth investing. The Ashapuri Gold Ornament Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Ashapuri Gold Ornament Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Ashapuri Gold Ornament Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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