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Gokul Agro RI review (May apply)

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•    GARL is engaged in the manufacturing and marketing of edible/non-edible oils and meals.
•    It has reported steady growth in its top and bottom lines for the reported periods. 
•    The RI is at a mere discount of 14.01% based on its last traded price of Rs. 107.00 (14.03.23).
•    Cash-surplus/well-informed may park funds with a long-term perspective. 

Gokul Agro Resources Ltd. (GARL) is a de-merged entity of Gokul Refoils & Solvent Ltd, is one of the leading FMCG Companies in India with an international presence and having state-of-the-art manufacturing and processing facilities for various kinds of Edible and Non-Edible oils and meals. It is an ISO 45001:2018 certified company with customers worldwide. GARL operates across the world with its trade and also has a subsidiary in Singapore in order to cater for its international trading operations in the key parts of the world. GARL has an extensive marketing and distribution network which reaches out the customers from more than 20 states in India. It caters for these states with products such as Soya bean oil, Cottonseed oil, Palm oil (Palmolein), Sunflower oil, Groundnut oil, Vanaspati etc.

GARL has been engaged in manufacturing and exports of industrial products viz. castor oil of various grades and its derivatives. It also has one of the largest manufacturing facilities to produce various grades of castor oil and its derivatives. Over the years, GARL established a huge loyal customer base in various countries across continents. The company supplies its products to the United States, South Korea, European Union, China, Singapore, Indonesia, Malaysia, Russia and Vietnam. As of the filing of this offer document, it had 586 employees on its payroll.

The company is coming out with a rights issue (RI) of 4471011 equity shares of Rs. 2 each at a fixed price of Rs.92 per share to mobilize Rs.41.13 cr. The company is issuing RI in the ratio of 1 share for every 32 shares held by the eligible stakeholders as of the record date of March 08, 2023. The issue opens for subscription on March 16, 2023, and will close on March 23, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. GARL is spending Rs. 0.26 cr. for this RI and from the net proceeds, it will utilize Rs. 38.87 cr. for working capital, and Rs. 2.00 cr. for general corporate purposes.  

The issue is self-managed by the company itself and Bigshare Services Pvt. Ltd. is the registrar of the issue. 

Post-RI, GARL's current paid-up equity capital of Rs. 28.61 cr. will stand enhanced to Rs. 29.51 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 1357.40 cr. 

On the financial performance front, the company has (on a consolidated basis) posted a turnover/net profit of Rs. 5600.39 cr. / Rs. 19.1 cr. (FY20), Rs. 8401.75 cr. / Rs. 44.69 cr. (FY21) and Rs. 10407.35 cr. / Rs. 122.91 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 57.75 cr. on a turnover of Rs. 5646.50 cr. As of September 30, 2022, its current paid-up equity capital of Rs. 28.61 cr. is supported by free reserves of Rs. 505.46 cr. Thus it has marked steady growth in its financial performance. 

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 scrip last closed on cum-right basis at Rs. 113.75 on March 06, 2023, and opened on an ex-right basis at Rs. 112.90 on March 08, 2023. Since then, it has marked a high/low of Rs. 115.60 / Rs. 106.35. The scrip last closed at Rs. 107.00 as of March 14, 2023. For the last 52 weeks, it has posted a high/low of Rs. 191.68 / Rs. 66.25. The promoters' holding has declined a bit to 71.97% as of February 10, 2023, against 72.17% for the previous two quarters ended December 31, 2022 period.

Conclusion / Investment Strategy

The issue appears fully priced based on its working and the market quotes. GARL has posted steady growth in its top and bottom lines for the reported periods. The RI is at a mere discount of around 14.01% based on its last traded price of Rs. 107.00 as of March 14, 2023. Cash surplus/well-informed investors may park funds with a long-term perspective.

Review By Dilip Davda on March 14, 2023

Review Author

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, a freelance journalist

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: ).

More Gokul Agro Resources Limited RI Views / Analysis / Recommendations ...

The Gokul Agro Resources Rights Issue 2023 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 Gokul Agro Resources Rights Issue 2023 worth investing. The Gokul Agro Resources Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Gokul Agro Resources Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Gokul Agro Resources Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.