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• GTIL is in the business of manufacturing and marketing garments, cotton printed fabrics etc.
• Its financial performance has expressed pressure on margins with rising competition.
• The company is operating in a highly competitive and fragmented segment.
• Investors may switch over the deal while selling their current holding and applying for RI to book some profits.
PREFACE:
Off late we are witnessing self-managed rights issues, wherein, we find many anomalies in the offer documents, and this is the company, where the offer document missing many info as well as having a mismatch on the RI issue expenses data. It is also missing its employees' strength data. It also has garble on its number of production units (refer P71 of the offer document).
ABOUT COMPANY:
Globe Textiles (India) Ltd. (GTIL) is engaged in manufacturing of Garments, cotton printed fabrics, home textiles and fancy fabrics. The Company's manufacturing activities are undertaken at six different units situated at Ahmedabad - Gujarat.
The Company caters both domestic as well as international markets. It has also been recognized by Government of India as a "One Star Export House". The company majorly focuses in high quality of fabrics and garments across globe utilizing best technology, delivering quality textiles at the most competitive prices and maintaining long term association with clients.
Its long-standing relationship with major customers has been one of the most significant factors contributing to its growth. Over the years, it has steadily developed a robust base of international customers for its products in south-east Asian and gulf countries. The offer document is silent on its employees' strength.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 151141500 equity shares of Rs. 2 each at a fixed price of Rs. 3 per share to mobilize Rs. 49.00 cr. The issue has already opened for subscription on March 06, 2024, and will close on March 15, 2024. The full amount is to be paid along with application for the number of shares applied. The company is offering RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of February 23, 2024. Post allotment, shares will be listed on NSE. The company is spending Rs. 0.15 cr. for this RI process, and from the net proceeds of the RI, the company will utilize Rs. 20.00 cr. for acquisition of equity shares in Globe Denwash Pvt. Ltd., Rs. 14.50 cr. for repayment of loan, Rs. 10.50 cr. for working capital, and Rs. 4.00 cr. for general corporate purposes.
There is a mismatch in the IPO funds utilization information. While the company claims approximant total expenses of Rs. 3.85 cr., this amount is not reflected in the tables on the offer document pages no. 19, 52, and 57.
The issue is self-managed by the company, and Skyline Financial Services Pvt. Ltd. is the registrar of the issue. Bigshare Services Pvt. Ltd. is the RTA of the company.
Post-RI, company's current paid-up equity capital of Rs. 30.23 cr. will stand enhanced to Rs. 60.46 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 90.69 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 385.56 / Rs. 5.14 (FY22), and Rs. 401.83 cr. / Rs. 4.51 cr. (FY23). As per the unaudited results data submitted to NSE, the company earned a net profit of Rs. 2.81 cr. on a total income of Rs. 215.10 cr. for H1 of FY24 ended on September 30, 2023.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. The company has voluntarily adopted a dividend policy based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: GLOBE (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 4.50 on February 22, 2024, and opened on an ex-right basis at Rs. 3.75 on February 23, 2024. Since then, it has marked a high/low of Rs. 4.35 / Rs. 3.75. The scrip last closed at Rs. 4.30 as of March 06, 2024. For the last 52 weeks' it has posted a high/low of Rs. 4.92 / Rs. 1.72. The counter is currently under ESM - II (35).
The promoters' holding has been constant at 40.91% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on March 7, 2024
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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.
About Dilip Davda
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.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Globe Textiles Rights Issue 2024 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 Globe Textiles Rights Issue 2024 worth investing. The Globe Textiles Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Globe Textiles Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Globe Textiles Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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