Integra Essentia RI (2nd) review (May apply)

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•    IEL is coming out with its second Rights Issue (RI) within six months. 
•    Its last RI was in the month of May 2022 at Rs. 1.80 per share. 
•    Promoters' holding is just at 20.81% for the last three quarters raising concern.
•    IEL has posted growth in its top and bottom lines for the last 18 months. 
•    Well-informed cash surplus investors may consider parking funds. 

Integra Essentia Ltd. (IEL) (erstwhile known as Integra Garments & Textiles Ltd.) is currently engaged in the business of Life Essentials i.e. food (agro products), clothing (textiles and garments), infrastructure (materials and services for construction and infrastructure development), and energy (materials, products, and services for renewable energy equipment and projects), and other ancillary products and services required to sustain the modern life. The company trades/does all activities on a third-party basis. 

The company is issuing second Rights shares within six months. Its first right issue was in the month of May 2022 at a price of Rs. 1.80 per share to mobilize Rs. 49.80 cr. Since then, the counter is well operated and the price is maintained at an optimum level to pave the way for this second rights issue. 

To meet its funding needs for working capital (Rs. 37.00 cr.), and general corporate purpose (Rs. 12.35 cr.), IEL is offering a Rights issue (RI) in the ratio of 37 shares for every 200 shares held by the eligible stakeholders as of the record date of November 17, 2022. The company mulls raising Rs. 49.95 cr. post entire process for this RI is over for the issuance of 71351144 equity shares of Re. 1 each at a fixed price of Rs. 7 per share. On application full amount is to be paid for the number of shares applied. The issue opens for subscription on December 01, 2022, and will close on December 14, 2022. Post allotment, shares will be listed on BSE and NSE. IEL is spending Rs. 0.60 cr. for this RI process. 

The issue is solely lead-managed by Hexaxis Advisors Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar of the issue.

Post-RI, IEL's current paid-up equity capital of Rs. 38.57 cr. will stand enhanced to Rs. 45.70 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 319.92 cr. 

On the financial performance front, for the last fiscal, IEL has (on a consolidated basis) posted a turnover/net profit (loss) of Rs. 68.61 cr. / Rs. 1.09 cr. (FY22). For the previous fiscal, it had no activities and posted a loss of Rs. - (0.61) cr. on other income of just 0.04 cr.

As per unaudited results filed with BSE, the company has earned a net profit of Rs. 2.74 cr. on a turnover of Rs. 115.37 cr. for H1 of FY23. As of September 30, 2022, its Rs. 38.57 cr. paid-up capital has a negative reserve of Rs. - (16.16) cr.  

The company has not declared any dividends in the reported financial periods and 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. 7.31 on November 16, 2022, and opened on an ex-right basis at Rs. 7.50 on November 17, 2022. Since then, it has marked a high/low of Rs. 9.07 / Rs. 7.50. It last closed at Rs. 9.06 on November 29, 2022. The scrip has posted the last 52 weeks' high/low of Rs. 9.07 / Rs. 1.20. This indicates that the counter is well-operated and kept above the RI pricing to lure investors.  Promoters' holding has remained constant at 20.81% for the last three quarters ended on September 30, 2022. 

Conclusion / Investment Strategy

The counter is well managed for the last few months and is quoting above and around the RI pricing. Promoters holding below 21% raise concern. Well-informed / cash surplus investors may consider an investment with long-term perspectives.

Review By Dilip Davda on Nov 29, 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 Integra Essentia Limited RI Views / Analysis / Recommendations ...

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