Kshitij Poly NSE RI review - (Avoid)

•    The company is engaged in manufacturing variety of printing and stationery products. 
•    It has posted an average financial performance for the reported periods.
•    The issue appears aggressively priced based on its financial data so far. 
•    The company is operating in a highly competitive and fragmented segment. 
•    There is no harm in skipping this "high risk/low return" bet with no promoter's holding. 

ABOUT COMPANY:
Kshitij Polyline Ltd. (KPL) is in the business of running Manufacturing, marketing, sourcing of Plastic Sheet, lamination sheet, folders, I card and files having wide application in printing and stationery. The Company & its executives have developed the skill and expertise in designing and innovation in office stationery, calendar, dairy and student study materials of different variety colours, design and application. 

It has also developed the in house technical & Design team to provide stationery solution and implementation for calendar, diary, books as replacement of traditional material with new and innovative PP material. KPL's aim to develop its Brand for quality products for Office stationery, Publicity material, ID card & smart card, File & folders & wiro books and developed the technique to make all products as ― Make in India and provide competition to China and other Markets.

The company has developed the regular whole sellers and distributors for supply of laminated sheet, PP sheet, office stationery and allied products. KPL has established own distribution and marketing network in Pan India Basis. With its own network, company has developed the reputation and goodwill for timely supply of material to their reputed clients. The offer document is silent on its employees' strength data. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 40521864 equity shares of Rs. 2 each at a fixed price of Rs. 6.40 per share to mobilize Rs.25.93 cr. The RI is opening for subscription on June, 25, 2024, and will close on July 09, 2024. The company is issuing RI in the ratio of 4 for 5 to its eligible stakeholders as on the record date of June 18, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE. The company is spending Rs. 0.45 cr. for this RI, and from the net proceeds, it will utilize Rs. 13.20 cr. for repayment/prepayment of certain borrowings, Rs. 6.49 cr. for capex on purchase of plant and machineries, and Rs. 5.79 cr. for general corporate purposes. 

The issue is self-managed by the company itself and KFin Technologies Ltd. is the registrar to the issue.

Post-RI, company's current paid-up equity capital of Rs. 10.13 cr. will stand enhanced to Rs. 18.24 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 58.35 cr. There is an error in Capital Structure table of the offer document, as it is showing Rs.9.11 cr. as post-RI equity capital for the company against Rs. 18.24 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit/ -(loss) of Rs. 39.07 cr. / Rs. 0.42 cr. (FY22), Rs.34.08 cr. / Rs. 0.37 cr. (FY23), and Rs. 66.19 cr. / Rs. 1.61 cr. (FY24). On a standalone basis, it posted a total income of Rs. 39.98 cr. with a loss of Rs. - (0.56) cr. for FY24.

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: KSHITIJPOL (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 5.10 on May 24, 2024, and opened on an ex-right basis at Rs. 7.00 on June 21, 2024. Thus it has no regular trade. Since then, it has marked a high/low of Rs. 7.05 / Rs. 6.41. The scrip last closed at Rs. 6.95 as of June 21, 2024. For the last 52 weeks' it has posted a high/low of Rs. 8.33 / Rs. 4.12. The counter is currently trading under ESM:1.

The promoters' holding has been reduced to 0% for quarter ended March 31, 2024 against 57.35% as of March 31, 2023. Thus promoters' selling out their entire stake in last one year. The counter is well managed above the RI price to tempt investors.