Camlin Fine RI review - (May apply)

•    The company is a global player for manufacturing/marketing speciality chemicals and blends used by varied industries.
•    It posted losses from FY24 onwards, that raises major concern.
•    Based on recent trends, the issue appears aggressively priced.
•    Well-informed investors may park moderate funds for long term.

PREFACE:
Though this RI is opening on January 18, 2025, and the offer document is dated January 09, 2025, it was made available on NSE only on January 15, 2025, and on BSE on January 16m 2025. It this delay is deliberate?

ABOUT COMPANY:
Camlin Fine Sciences Ltd. (CFSL) is a vertically integrated company, engaged in research, development, manufacturing, commercializing, and marketing of speciality chemicals and blends which are used in a wide array of food, feed, animal and pet nutrition, fragrance, pharma and industrial products. The company markets products globally including in Europe, Asia Pacific (including India), Africa, Middle East, South, Central and North America. It categorizes business into four different verticals based on product portfolio, namely: (i) Diphenols; (ii) Shelf-life Extension Solutions (which include antioxidants, its value-added blends, ingredients and additives); (iii) Performance Chemicals; (iv) Aroma ingredients. 

It has recently achieved a significant milestone in developing a high quality specialized grade for Hydroquinone, leading into the crucial phase of conducting plant trials. The company has also successfully developed and implemented enhanced quality of antioxidants, tailored specifically for discerning customers. These products have smoothly transitioned from R&D to full-scale production and have made market debut. Its newest offerings include emulsifier-based ingredients designed to enhance texture, consistency, mouthfeel, appearance, process efficiency and yield for diverse range of food industry applications. Its specialty chemicals are utilized in a broad array of applications, serving a diverse customer base across various industries.

CFSL’s customers include large multi-national companies, regional companies and local manufactures of speciality chemicals, pharmaceuticals, agro-chemicals, aroma chemicals and petrochemicals. As of December 10, 2024, it had 627 employees on its payroll and also hires additional contract labourers as and when required. There appears to be some mismatch in total number of employees’ data on page no. 101/102 of the offer document.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 20426244 equity shares of Rs. 1 each at a fixed price of Rs. 110 per share to mobilize Rs. 224.69 cr. The RI opens for subscription on January 17, 2025, and will close on January 27, 2025. The company is offering RI in the ratio of 5 for 41 to its eligible stakeholders as of the record date of January 08, 2025. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 1.99 cr. for this RI process, and from the net proceeds, it will utilize Rs. 169.05 cr. for repayment/prepayment of certain borrowings, and Rs. 53.65 cr. for general corporate purposes. 

The issue is jointly lead managed by Centrum Capital Ltd., and InCred Capital Wealth Portfolio Managers Pvt. Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up capital of Rs. 16.75 cr. will stand enhanced to Rs. 18.79 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2067.14 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total income/net profit/ - (Loss) of Rs. 1687.36 cr. / Rs. 39.81 cr. (FY23), Rs. 1628.62 cr. / Rs. – (104.88) cr. (FY24). For H1 of FY25 ended on September 30, 2024, it posted a loss of Rs. – (150.76) cr. on a total income of Rs. 822.52 cr., thus massive loss reporting for FY24 onwards raises concerns. 

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. The offer document is silent on its dividend policy. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 532834 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 139.65 on January 07, 2025, and opened on an ex-right basis at Rs. 134.75 on January 08, 2025. Since then, it has marked a high/low of Rs. 140.05 / Rs. 120.15. The scrip last closed at Rs. 134.70 as of January 16, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 141.67 / Rs. 78.16. 

The promoters’ holding has been constant at 48.02% for the last three quarters ended with Dec. 31, 2024. The counter is well managed above the RI price to lure investors.