Beardsell Right Issue review (May apply)

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•    BL is in the thermal insulation and packaging products business.
•    It has marked inconsistency in its top and bottom lines for reported periods.
•    Based on its financial data, RI is fully priced. 
•    Cash surplus investors may consider investing with a long term perspective.

Beardsell Ltd. (BL) is in the business of manufacturing and marketing a variety of thermal insulation and packaging products, mainly Expanded Polystyrene (EPoS) and rigid and flexible Polyurethane Foam (PUF) products. It is at the forefront of providing products and services for packaging, thermal insulation and pre-fabricated metal sheet and EPoS core buildings and panels.

The company also provides insulation contracting services and manufacture specialized thermally insulated doors and windows for cold storage and clean rooms. BL also caters to the construction industry and manufacture and market pre-fabricated metal sheet and EPoS core buildings and panels. Finished goods are subjected to exhaustive quality checks, in line with industry standards.

It has a wide customer base and caters to customers from various industries like consumer durables (national and international), electronics, engineering products, pharmaceuticals and agro products like vegetables and fish.

BL has manufacturing facilities near Chennai, Bengaluru, Hyderabad, Thane, Pune and NOIDA. All these plants are equipped with imported / domestic production machinery and utilities.

To part finance its plans for part repayment/prepayment of inter-corporate deposits (Rs. 2.45 cr.), repayment/prepayment of certain borrowings (Rs. 3.75 cr.) and general corporate purpose (Rs. 2.34 cr.), BL is offering rights equity shares in the ratio of 1 share for every 3 shares held as of the record date i.e. December 17, 2021. The company is issuing 9366336 shares and has fixed a price of Rs. 10 per share having a face value of Rs. 2 each. The issue opens for subscription on December 31, 2021, and will close on January 14, 2022. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.83 cr. to mobilize Rs.9.37 cr. The issue is solely lead managed by Saffron Capital Advisors Pvt. Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue.

Post RI, BL's current paid-up equity capital of Rs. 5.62 will stand enhanced to Rs. 7.49 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 37.47 cr. As of September 30, 2021, the promoter's holding was a little lower at 60.77% against 6133% as of June 30, 2021.

On the financial performance front, on a consolidated basis, BL has posted turnover/net profits of Rs. 193.87 cr. / Rs. - (0.86) cr. (FY19), Rs. 161.72 cr. / Rs. 0.82 cr. (FY20) and Rs. 133.15 cr. / Rs. - (0.40) cr. (FY21). For the first half of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 0.60 cr. on a turnover of Rs. 82.73 cr. Thus it has marked inconsistency in its top and bottom lines for all these reported periods. 

The company has paid a dividend of 12% for FY20 and 5% for FY21. It will continue its prudent dividend policy based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 13.58 on December 15, 2021, and opened on the ex-rights basis at Rs. 12.90 on December 16, 2021. Since then, it has posted a high/low of Rs. 14.85 / Rs. 11.35. The scrip has posted 52 weeks high/low of Rs. 17.61 / Rs. 7.94. It last closed at Rs. 13.10 (as of December 30, 2021) and based on this, its post-RI market cap comes to Rs. 49.08 cr.

Conclusion / Investment Strategy

Based on its financial data for the reported periods, the issue appears fully priced. Inconsistency in its top and bottom lines are a major concern. Cash surplus investors may consider an investment with a long term perspective.

Review By Dilip Davda on Dec 30, 2021

Review Author

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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).

About Dilip Davda

Dilip Davda, a freelance journalist

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.

Email: dilip_davda@rediffmail.com

More Beardsell Limited RI Views / Analysis / Recommendations ...

The Beardsell Rights Issue 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 Beardsell Rights Issue worth investing. The Beardsell Rights Issue Note sets the Rights Issue expectations in systematic way which tells you if Beardsell Rights Issue good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Beardsell Rights Issue by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.