Eureka Ind RI - BSE review - (Avoid)

•    The company is engaged in the business of trading in agricultural products and goods.
•    It has posted losses till FY24, and operating in a highly competitive and fragmented segment.
•    Its offer document has many errors in financial data, and has not given any financial performance for the FY25 broker period.
•    The promoters’ holding is “Zero”.
•    Poist-RI equity base of Rs. 57.75 cr. may face its servicing issue.
•    Simply stay away from this offer even though it is at par.

PREFACE:
The company is self-managing the RI and has perhaps prepared offer documents half-heartedly as it has two set of financial data i.e., in Rs. lakhs and Rs. thousands. It erred on its post-RI equity capital data on page 36. What is more, that the offer document contains its financial data only up to March 31, 2024. Thus, it is missing on the compliance’s requirements. Its average price data on page 131 is also garbled. How this offer is approved by the designated exchange is a million-dollar question, as it is currently trading under GSM/ESM. Post-RI equity of Rs. 57.75 cr. may face its servicing issue considering minuscule earnings.

ABOUT COMPANY:
Eureka Industries Ltd. (EIL) is engaged in the business of trading of agricultural products and goods. It is operating in a highly competitive and fragmented segment.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 49000000 equity shares of Rs. 10 each at par to mobilize Rs. 49.00 cr. The RI opens for subscription on April 09, 2025, and will close on April 30, 2025. The company is offering RI in the ratio of 28 for 5 to its eligible stakeholders as of the record date of March 28, 2025. The company is asking full money on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.27 cr. for this RI process, and from the net proceeds, it will utilize Rs. 38.93 cr. for working capital, and Rs. 9.80 cr. for general corporate purposes.

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

Post-RI, company’s current paid-up equity capital of Rs. 8.75 cr. will stand enhanced to Rs. 57.75 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 57.75 cr. (There is a garble in post-RI equity data on page no. 36 of the offer document and reflects only the RI size as post-RI capital).

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total revenue/net profit/ -(loss) of Rs. 8.39 cr. / Rs. – (0.41) cr. (FY23), and Rs. 19.25 cr. / Rs. - (4.56) cr. (FY24). It is highly surprising that the company has not given any financial data for the broken period of FY25 and thus missing the compliances. 

It has created a big confusion with financial data in Rs. lakhs and in Rs. thousands on different pages of the offer document.

As per exchange filing, the company has reported a net profit of Rs. 1.66 cr.  on a total revenue of Rs. 46.18 cr. for 9M of FY25 ended on December 31, 2024, but this info is missing from the offer document. There appears to be some window dressing ahead of RI.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It has already adopted a dividend policy, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 521137 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 14.91 on March 27, 2025, and opened on an ex-right basis at Rs. 11.00 on March 28, 2025. Since then, it has marked a high/low of Rs. 11.84 / Rs. 10.26. The scrip last closed at Rs. 10.50 as of April 07, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 12.17 / Rs. 1.95. The counter is currently under GSM: Stage 0 and ESM: Stage 1.

The promoters’ holding has been constant at 0% for the last three quarters ended with December 31, 2024. The counter is well managed above the par value by vested interest to lure investors.