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Hilton Metal RI review (Avoid)

Hilton Metal Forging Ltd Logo

•    HMFL is in the business of stainless steel forging flanges, pipe fittings, valve bodies, etc.
•    It suffered a severe setback for FY21 with huge losses.
•    It has turned the corner as per the last 15 months' performance.
•    There is no harm in skipping this pricy right issue offer. 

ABOUT COMPANY:
Hilton Metal Forging Ltd. (HMFL) is one of the technology leaders in the forging industry. The company is mainly engaged in manufacturing stainless-steel forging flanges allied pipe fitting items and Valve Body bonnets for the Oil and Gas Sector. The products include stainless steel forged flanges forged fittings and lap-joint stub-ends (seamless). The company provides services in the areas such as the oil and gas sectors, petrochemical and refineries, marine and shipbuilding, paper and pulp, and agricultural sectors. The Company has secured various certifications of quality assurance from worldwide renowned certifiers. The company got accreditations of API ISO/TS 29001 (American Petroleum Institute) and was Approved Manufacturers by Sasol Technology. Also, they have secured the approval of A.E.L. the Indian Giant.

ISSUE DETAILS:
To meet its funding needs for working capital (Rs. 24.69 cr.), and general corporate purposes (Rs. 8.00 cr.), HMFL is offering the Right Issue (RI) in the ratio of 2 for 5 to eligible shareholders whose names appear on their books as of the record date of October 20, 2022. The company is issuing 6000000 equity shares of Rs. 10 each at a fixed price of Rs. 55 per share to mobilize Rs. 33.00 cr. The issue has already opened for subscription on November 03, 2022, and will close on November 11, 2022. Full application money is to be paid along with the application. Post allotment, shares will be listed on BSE and NSE. HMFL is spending Rs. 0.31 cr. for this RI process. 

The issue is solely lead managed by Kunvarji Finstock Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue.

Post RI, HMFL's current paid-up equity capital of Rs. 15.00 cr. will stand enhanced to Rs. 21.00 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 115.50 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a turnover/net profit/(loss) of Rs. 47.70 cr. / Rs. - (19.57) cr. (FY21), Rs. 84.19 cr. / Rs. 1.76 cr. (FY22). As per unaudited results, for Q1 of FY23, it earned a net profit of Rs. 1.02 cr. on a turnover of Rs. 17.88 cr. 

DIVIDEND POLICY:
The company last paid a dividend of Rs. 0.25 in September 2015 and thereafter, it skipped. It may adopt a prudent dividend policy post-listing of RI based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 532847 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 69.65 on October 19, 2022, and opened on an ex-right basis at Rs. 65.00 on October 20, 2022. Since then, it has marked a high/low of Rs. 71.90 / Rs. 64.00. It last closed at Rs. 68.85 on November 03, 2022. The scrip has posted the last 52 weeks' high/low of Rs. 80.42 / Rs. 11.95. This indicates that the counter is well-operated and kept above the RI pricing to lure investors.  Currently, the counter is under ASM LT - Stage 1. Promoters' holding has declined from 47.30% as of March 31, 2022, to 39.26% as of September 30, 2022, which raises concern.


Conclusion / Investment Strategy

The counter is well managed amidst lower promoter’s holding to lure investors for a pricy right issue offer. Its financial performance is not in line with the asking price. There is no harm in skipping this RI as one may get a chance to catch hold at discounted price later on.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Nov 3, 2022

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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).


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.

Email: dilip_davda@rediffmail.com

More Hilton Metal Forging Ltd RI Views / Analysis / Recommendations ...

The Hilton Metal Forging Rights Issue 2022 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 Hilton Metal Forging Rights Issue 2022 worth investing. The Hilton Metal Forging Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Hilton Metal Forging Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Hilton Metal Forging Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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