Bhakti Gems RI review - (Avoid)

•    BGIL is in the business of manufacturing and marketing gold jewellery. 
•    Its financial performance so far is average. 
•    It operates in a highly competitive and fragmented segment with many players.
•    There is no harm in skipping this fully priced bet that is having an average financial performance. 

ABOUT COMPANY:
Bhakti Gems & Jewellery Ltd. (BGJL) is the manufacturer, wholesaler and supplier of gold jewellery and is headquartered in Ahmedabad, Gujarat. The Company is mainly focused on traditional Indian jewellery. Its products include handmade gold jewellery studded with precious and semi-precious stones such as diamond, ruby, cubic zirconia (cz) etc. The jewellery is designed by it and manufactured on a job-work basis at Ahmedabad, Rajkot and Mumbai.

BGJL is a customer-centric Company, its prime focus is to attain the utmost client satisfaction by offering them quality-assured products. It also delivers products in quality packaging material to ensure safe transport. Moreover, its ethical trade practices, transparent business dealings and timely delivery of products help it in maintaining cordial relations with customers. As of the date of filing of this offer document, it had 19 employees on its payroll. As of the date of this Letter of offer, the company does not hold any intellectual property.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 5013173 equity shares of Rs. 10 each at a fixed price of Rs. 12 per share to mobilize Rs. 6.02 cr. The issue opens for subscription on June 09, 2023, and will close on June 20, 2023. It is offering RI in the ratio of 1 for 2 to eligible stakeholders as of the record date of May 31, 2023. The full amount is to be paid on an application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.40 cr. for this RI process and from the net proceeds it will utilize Rs. 5.37 cr. for working capital, and Rs. 0.25 cr. for general corporate purposes. 

This RI is self-managed by the company management and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. 

Post RI, BGJL's current paid-up equity capital of Rs. 10.03 cr. will stand enhanced to Rs. 15.04 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 18.05 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, BGJL has posted a turnover/net profit of Rs. 62.38 cr. / Rs. 0.07 cr. (FY19), Rs. 55.13 cr. / Rs. 0.23 cr. (FY20), Rs. 67.95 cr. / Rs. 0.27 cr. (FY21), Rs. 88.97 cr. / Rs. 0.88 cr. (FY22). 

For 9M of FY23 ended on December 31, 2022, it earned a net profit of Rs. 0.47 cr. on a turnover of Rs. 79.51 cr. As per the exchange filing, BGJL has reported a turnover of Rs. 102.91 cr. with a net profit of Rs. 0.80 cr. (on an unaudited basis). Thus its financial performance is average with varying margins. 

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: 540545 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 13.80 on May 30, 2023, and opened on an ex-right basis at Rs. 13.50 on May 31, 2023. Since then, it has marked a high/low of Rs. 13.74 / Rs. 12.00. The scrip last closed at Rs. 13.03 as of June 07, 2023. For the last 52 weeks, it has posted a high/low of Rs. 21.05 / Rs. 11.01. The promoters' holding has been constant at 39.19% for the last three quarters ended on March 31, 2023. The counter is well managed above the offer value to lure investors.