Jaykay Enterprises RI Review - (Apply)

•    After long a RI is coming from the JK group company at a lucrative price.
•    The company is engaged in the manufacturing and marketing of Defence and Aerospace products as well as Digital and Advanced systems.
•    It has posted improved performance for the last two fiscals.
•    Investors may park funds in this not to miss offer. 

PREFACE:
The company is coming out with its RI on August 27, 2024, while its RI record date was July 19, 2024. Thus a considerable delay has taken place in process. Reasons perhaps known better by the lead manager/promoters. 

ABOUT COMPANY:
Jaykay Enterprises Ltd. (JEL) is a part of J K Organization, a diversified JK group. It started business in 1943 under the name and style of J.K. Investment Trust Limited under the provisions of the Indian Companies Act, VII of 1913, to function as an investment company. In 1960, the Company transitioned from the business of an investment company and entered into the business of manufacturing nylon and acrylic fibers. In order to reflect the business of the Company, name was changed to J.K. Synthesis Limited.

The Company's performance was satisfactory till 1987-88 but operations started deteriorating thereafter, which forced the Company to opt for rehabilitation and revival steps, and therefore the company in the year 1998 was referred to the Board for Industrial and Financial Reconstruction (BIFR) and thereafter to Appellate Authority for Industrial & Financial Reconstruction (AAIFR) whereby pursuant to a scheme of rehabilitation as sanctioned by AAIFR, various revival steps were undertaken including slump sale of the cement manufacturing division of the Company to a separate division "J. K. Cements Limited".

The Company along with its Subsidiaries, Associates and/or LLP is primarily engaged in the business portfolio: (i) Defence & Aerospace- Machining and Manufacturing of precision-turned components and all varied types of engineering goods for the Defence, Aerospace along with trading and dealing in various kinds of products related to Defence, Aerospace and allied industries; and (ii) Digital & Advanced Systems- Additive manufacturing including 3D Printing, providing technical consultancy services, 3D Scanning, Reverse Engineering, plant modelling, design, development, and marketing of 3D printers, advance systems and software products for 3D and allied activities. As on the date of the Letter of Offer, I had the strength of 89 full-time employees.

ISSUE DETAILS:
The company is coming out with its second Rights Issue (RI) of 58457688 equity shares of Re. 1 each at a fixed price of Rs. 25 per share to mobilize Rs. 146.14 cr. The RI is opening for subscription on August 27, 2024, and will close on September 04, 2024. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of July 29, 2024. The company is asking full amount per share on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.82 cr. for this RI process, and from the net proceeds, it will utilize Rs. 51.55 cr. for investment in wholly owned subsidiary JK Defence to establish manufacturing facility, Rs. 33.00 cr. for repayment of certain borrowings by JK Defence, and Rs. 48.00 cr. for investment in wholly owned subsidiary JK Digital for purchase of machinery, and Rs. 12.77 cr. for general corporate purposes.

This RI is solely lead managed by Corporate Professionals Capital Pvt. Ltd., while Alankit Assignments Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 5.85 cr. will stand enhanced to Rs. 11.69 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 292.29 cr. Based on its last traded price, the market cap stands at Rs. 1003.72 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. 58.66 cr. / Rs. 8.27 cr. (FY23), and Rs. 66.64 cr. / Rs. 9.60 cr. (FY24). It posted steady growth in its top and bottom lines for the reported periods.  

DIVIDEND POLICY:
The offer document is silent on company's dividend policy. As per BSE Web, it has not paid any dividends for the reported periods. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 500306 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 188.55 on July 18, 2024, and opened on an ex-right basis at Rs. 101.40 on July 19, 2024. Since then, it has marked a high/low of Rs. 105.00 / Rs. 85.00. The scrip last traded at Rs. 85.85 as of August 27, 2024. For the last 52 weeks' it has posted a high/low of Rs. 107.54 / Rs. 36.62. Based on the last traded price, this RI appears lucrative.

The promoters' holding has been constant at 56.29% for the last three quarters ended with June 30, 2024. The counter is well performing following the ongoing plans.