Dollex Agro NSE RI review - (May apply)

•    The company is engaged in the manufacturing and trading of sugar and related products.
•    It posted growth in its top and bottom lines for the reported periods.
•    The sudden boost in its bottom lines from FY23 onwards raises eyebrows.
•    The company is operating in a highly competitive and fragmented segment, this may impact their future earnings.
•    Well-informed/cash surplus investors may park moderate funds for long term.

PREFACE:
This RI is opening on May 21, 2025, and its offer document is dated May 13, 2025, but the offer document was uploaded on the designated exchange website only on previous eve i.e., in the afternoon of May 20, 2025. 

ABOUT COMPANY:
Dollex Agrotech Ltd. (DAL) is engaged into the business of manufacturing & trading of sugar with captive power cogeneration capabilities. As of March 31, 2025, it had 49 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 14980800 equity shares of Rs. 10 each at a fixed price of Rs. 33 per share to mobilize Rs. 49.44 cr. The RI is opening for subscription on May 21, 2025 and will close on June 04, 2025. The company is offering RI in the ratio of 3 for 5 to its eligible stakeholders as of the record date of May 14, 2025. The minimum application for RI is 2400 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The company is asking full money on application for the number of shares applied. The company is spending Rs. 0.25 cr. for this RI process, and from the net proceeds, it will utilize Rs. 26.80 cr. for working capital of Ethanol Project, Rs. 12.38 cr. for installation of Ethanol Project, and Rs. 10.00 cr. for general corporate purposes.

The RI is self-managed by the company itself and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Bonanza Portfolio Ltd. is the advisor to the issue. 

Post-RI, company’s current paid-up equity capital of Rs.24.97 cr. will stand enhanced to Rs. 39.95 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 131.83 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 79.63 cr. / Rs. 3.27 cr. (FY22), Rs. 1105.55 cr. / Rs. 6.11 cr. (FY23), Rs. 135.66 cr. / Rs. 7.02 cr. (FY24) For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 7.80 cr. on a total income of Rs. 118.80 cr. Thus, it posted steady growth in its top and bottom lines for the reported periods. However, boosted bottom lines from FY23 onwards raise eyebrows and concern over its sustainability going forward. 

While, it has posted good earnings from manufacturing activities, it is incurring loss from trading activities for 9M of FY25, it earned net profits from Trading activities over and above losses from manufacturing activities for FY24. Thus, this sheer contrast is a big surprise. Its borrowed funds to the tune of Rs. 138+ cr. as of December 31, 2024 raise alarm. 

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 NSE WEBSITE DATA: SCRIP CODE: DOLLEX (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 40.85 on May 13, 2025, and opened on an ex-right basis at Rs. 39.95 on May 14, 2025. Since then, it has marked a high/low of Rs. 39.95 / Rs. 34.50. The scrip last closed at Rs. 35.80 as of May 20, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 47.15 / Rs. 29.91. 

The promoters’ holding has been constant at 71.69% for the last three quarters ended with March 31, 2025. The counter is well managed above the RI price to lure investors.