Grasim Ind. RI review (Apply)

• A right issue at a discount of around 14% from Aditya Birla Group.
• It's a well-diversified company from a one of the largest business group in India.
• This flagship company has posted good financial performance with dividend distributions.
• Investors should no miss this opportunity for subscribing RI at discounted price.

ABOUT COMPANY:
Grasim Industries Ltd. (GIL) is a well-diversified flagship company of Aditya Birla Group, which is widely recognized as one of the largest business group in India. The company commenced its operations as a textile manufacturer and has since evolved into a diversified conglomerate with a leading position across many of its businesses.

GIL's operating segments comprise viscose, chemicals, cement, financial services and others covering textiles, insulators, paints, B2B e-commerce and renewable energy. The major companies under GIL umbrella are Ultratech Cement Ltd., Aditya Birla Capital Ltd., Aditya Birla Renewables Ltd.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 22073935 equity shares of Rs. 2 each with a fixed price of Rs. 1812 per share to mobilize Rs. 3999.80 cr. The company is issuing RI in the ratio of 6 for 179 to eligible stakeholders as of the record date of January 10, 2024. The issue opens for subscription on January 17, 2024, and will close on January 29, 2024. The company is asking Rs. 453 per share as application money for the number of shares applied. The balance of Rs. 1359 per share to be paid in three additional calls as and when called by the company from time to time. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 22.15 cr. for this RI process and from the net proceeds, it will utilize Rs. 3000 cr. for repayment/prepayment of certain borrowings, and Rs. 977.65 cr. for general corporate purposes.

The issue is jointly lead managed by Axis Capital Ltd., BofA Securities India Ltd., Jefferies India Pvt. Ltd., JM Financial Ltd., Kotak Mahindra Capital Co. Ltd., and SBI Capital Markets Ltd., while KFin Technologies Ltd. is the registrar of the issue.

Post RI, company's current paid paid-up equity capital of Rs. 131.69 cr. will stand enhanced to Rs. 136.11 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 123310.72 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 of Rs. 96522.47 / Rs. 10690.55 cr. (FY22), and Rs. 121239.13 cr. / Rs. 11078.20 cr. (FY23). As per unaudited financial results for H1 of FY24 submitted to stock exchange, it earned a net profit of Rs. 4600.40 cr. on a total income of Rs. 61866.25.

As of September 30, 2023, its current paid-up equity capital of Rs. 131.70 cr. is supported by free reserves of Rs. 83038.54 cr.

DIVIDEND POLICY:
The company has been a regularly dividend paying company. The dividends paid by the company for recent past were 500% (FY23, FY22), 450% (FY21), 200% (FY20) and 350% (FY20).

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 500300 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 2065.50 on January 09, 2024, and opened on an ex-right basis at Rs. 2062.90 on January 10, 2024. Since then, it has marked a high/low of Rs. 2120.10 / Rs. 2044.35. The scrip last closed at Rs. 2111.70 as of January 12, 2024. For the last 52 weeks' it has posted a high/low of Rs. 2166.85 / Rs. 1521.89.

The promoters' holding has been constant at 42.75% for the last three quarters ended with Sept. 30, 2023. The counter is well managed above the RI price to lure investors.

Conclusion / Investment Strategy

This RI from Aditya Birla group company at a discount of around Rs. 299.70 (14.19%) based on its last traded price of Rs. 2111.70 (as of January 12, 2024). The company is a flagship company of the group and has fared well with constant dividend distribution. Repayment of debt to the tune of Rs. 3000 cr. will reduce its finance cost drastically. Investors should not miss this opportunity for medium to long term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on January 12, 2024

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 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 ).

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Grasim Industries Ltd. Review by Dilip Davda

The Grasim Industries 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 Grasim Industries Rights Issue 2024 worth investing. The Grasim Industries Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Grasim Industries Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Grasim Industries Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

Grasim Ind. RI review (Apply)

Conclusion / Investment Strategy

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