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Integra Essentia RI review (Avoid)

Integra Essentia Limited Logo

•    The company underwent a change of name and management.
•    Its financial performance are not in line with the asking price. 
•    It has vast carried forward losses which may take a longer time to wipe out.
•    There is no harm in skipping this aggressively priced RI.

Integra Essentia Ltd. (IEL) - (erstwhile known as Integra Garments & Textiles Ltd.) was incorporated as "Five Star Mercantile Private Limited" on August 6, 2007, as a private limited company which was converted to a public limited company in January 2012. 

Five Star Mercantile Private Limited entered into a Composite Scheme of Arrangement and Amalgamation with the division of Morarjee Textiles Limited called 'the Integra Division' and Morarjee Holdings Private Limited. This Composite Scheme of Arrangement and Amalgamation was approved by the Hon'ble Bombay High Court vide its order dated June 29, 2012. Consequently, the name of the Company was changed to "Integra Garments and Textiles Limited" on August 2, 2012.
Pursuant to this amalgamation, the main object of IEL shifted to carry on the business of manufacturing, along with trading, dealing, importing, exporting, and selling textiles and fabrics. It deals with men's, women's and children's clothing and wearing apparel garments and dresses of every kind, nature and description as per the market trends.

On July 14, 2021, it was acquired by Mr Vishesh Gupta upon completion of the open offer, and pursuant to the Share Purchase Agreement dated March 31, 2021, the management of the Company underwent a change.  

It 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 the renewable energy equipment and projects) and other ancillary products and services required to sustain the modern life.

IEL intends to take on a lease of about 2000 acres of land at different locations for producing certified Organic Agro Products for further expansion. As of December 31, 2021, it had a workforce of 7 employees, which is in expansion mode.

To part finance its funding needs for working capital (Rs. 36.15 cr.) and general corporate purposes (Rs. 12.30 cr.), IEL is coming out with a rights issue (RI) of 276684812 equity shares of Re. 1 each at a fixed price of Rs. 1.80 per share to mobilize Rs. 49.80 cr. The company is issuing 33 shares for every 13 shares held by the shareholders as of the record date of May 05, 2022. The issue opens for subscription on May 16, 2022, and will close on June 10, 2022. Post allotment, shares will be listed on BSE and NSE. IEL will be spending Rs. 1.36 cr. for this RI process.

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

Post RI, IEL's current paid-up equity capital of Rs. 10.90 cr. (108997047 shares) will stand enhanced to Rs. 38.57 cr. (385681859 shares). Based on the RI pricing, the company is looking for a market cap of Rs. 69.42 cr. 

On the financial performance front, for the last three fiscals, IEL has posted a turnover/net profits - (loss) of Rs. 0.02 cr. /Rs. - (2.33) cr. (FY19), Rs. 0.15 cr. /Rs. - (13.40) cr. (FY20) and Rs. 0.04 cr. / Rs. - (0.61) cr. (FY21). For the first nine months of current FY22 ended on December 31, 2021, it has marked a profit of Rs. 0.55 cr. on a turnover of Rs. 18.53 cr. 

Based on the above financial performance, the RI is aggressively priced. 

The company has not paid any dividends for the reported periods of the offer documents. It will adopt a prudent dividend policy based on its financial performance and future prospects.

The scrip last closed on cum-right basis at Rs. 1.95 on May 02, 2022, and opened on the ex-rights basis at Rs. 1.93 on May 09, 2022. Since then, it has marked a high/low of Rs. 1.93 / Rs. 1.93. The scrip last closed at Rs. 1.93 as of May 09, 2022. Based on this quote, its post-RI market cap stands at Rs. 74.44 cr. The scrip has posted the last 52 weeks high/low of Rs. 1.93 / Rs. 1.06. Promoters' holding is at 63.55% for the last three quarters ended on March 31, 2022.

Conclusion / Investment Strategy

The company has posted dismal financial performance for the last three fiscals. The counter is a thinly traded one with some movements with vested interests. It is currently under GSM – Stage 4. Its financial performance is not matching the asking price. There is no harm in skipping this RI with aggressive pricing.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 15, 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 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 Integra Essentia Limited RI Views / Analysis / Recommendations ...

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