Bhagiradha Chemicals RI review (Apply)

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•    BCIL is engaged in the manufacturing and marketing of pesticides.
•    It has posted improved performances for FY21 and 3Qs of FY22.
•    The issue is lucratively priced at a good discount to its current market price. 
•    The segment is poised for bright prospects ahead. 
•    Grab this opportunity of expanding your holding while subscribing to this RI. 

Bhagiradha Chemicals & Industries Ltd. (BCIL) is a professionally organized public limited company based at Hyderabad, India and dedicated to the manufacture of high-quality pesticides that includes a various technical grade of insecticides, herbicides and fungicides. The company is also capable of manufacturing liquid and powder formulations using their technical grade pesticides conforming to international standards. Also, the company manufactures speciality intermediates.

The company is one of the leading manufacturers of azoxystrobin (fungicide) and fipronil (insecticide) and is engaged in the manufacturing of products such as chlorpyriphos, triclopyr, imidacloprid, diafenthiuron and others. BCIL's manufacturing unit is located near the eastern coastal town of Ongole with three production blocks, 300 kms north of Chennai. Exports account for about 50% of the company's sales in general. Thus it has good export earnings as well. 

The Company has manufactured around 28 different Products including speciality intermediates and formulations which are sold in India, and since April 1, 2017, it has exported Products to 23 countries including Argentina, Australia, Brazil, Egypt, Germany, Indonesia, Israel, Portugal, the United Kingdom and the USA.

The company is coming out with a rights issue (RI) of 2095924 equity shares of Rs. 10 each at a fixed price of Rs. 400 per share to mobilize Rs. 83.84 cr. The company is offering RI in the ratio of 4 shares for every 17 shares held by the shareholders registered with the company as of April 09, 2022. It has also reserved 140700 equity shares for its eligible employees. The issue opens for subscription on April 19, 2022, and will close on May 04, 2022. Post allotment, shares will be listed on BSE and NSE. Full money is payable on the application. BCIL is spending Rs. 1.40 cr. for this RI process. From the residual portion, it will use Rs. 59.44 cr. for working capital, Rs. 13.00 cr. for repayment/prepayment of certain borrowings and Rs. 10.00 cr. for general corporate purposes. 

The issue is solely lead managed by Emkay Global Financial Services Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, BCIL's current paid-up equity capital of Rs. 8.33 cr. will stand enhanced to Rs. 10.41 cr. Based on RI pricing, the company is looking for a market cap of Rs. 416.23 cr. 

For the last two fiscals, on a consolidated basis, BCIL has posted turnover/net profits of Rs. 247.34 cr. / Rs. 6.51 cr. (FY20) and Rs. 318.54 cr. / Rs. 23.32 cr. (FY21). For the first nine months of FY22 ended on December 31, 2021, it has earned a net profit of Rs. 24.87 cr. on a turnover of Rs. 298.46 cr.  

Promoters holding has been constant at 24.90% for last three quarters. This indicates that the counter is well managed by operators. 

BCIL is a dividend-paying company. It last paid a dividend of 10% in November 2021. It will continue its prudent dividend policy in the coming years based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 1141.55 on April 06, 2022, and opened ex-right basis at Rs. 1037.95 on April 07, 2022. Since then, it has posted a high/low of Rs. 1050.00 / Rs. 941.30. It last closed at Rs. 975.55 on April 13, 2022, and based on this valuation, its market cap on post-RI fully diluted equity capital stands at Rs. 1001.39 cr. The scrip has posted the last 52 weeks high/low of Rs. 1050.00 / Rs. 385.44. Considering RI pricing at a discount to its current market price, the issue is a worthy bet.

Conclusion / Investment Strategy

The company is dividend-paying and is engaged in the pesticides segment which has been faring well and is poised for bright prospects ahead. Based on its current market price, this RI is lucratively priced. The company has posted growing earnings for the last 21 months of financial performance. Prospects of a good monsoon this year augur well for this company. Investors should grab this opportunity of expanding their holdings while subscribing to this reasonably priced RI.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Apr 14, 2022

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 Bhagiradha Chemicals and Industries Limited RI Views / Analysis / Recommendations ...

The Bhagiradha Chemicals Rights Issue 2022 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 Bhagiradha Chemicals Rights Issue 2022 worth investing. The Bhagiradha Chemicals Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Bhagiradha Chemicals Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Bhagiradha Chemicals Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.