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• MVL is in the Kraft and packaging paper as well as hotel business.
• It marked growth in its top and bottom lines for the reported periods.
• Bumper net profit for FY23 raise eyebrows.
• The counter is well operated and maintained above RI price to lure investors.
• Well-informed investors may park funds for the medium term rewards.
ABOUT COMPANY:
Magnum Ventures Ltd. (MVL) is a leading player in India's hospitality sector and the environment-friendly segment of the paper manufacturing industry. The Company is engaged in the business of manufacturing, trading and exporting paper for more than 25 years. It also owns and operates the Country Inn and Suites by Carlson (now Radisson) Hotel in Sahibabad, which is the second largest hotel under the Country Inn and Suites by Carlson brand and also has the distinction of being the first of its kind vegetarian five-star hotel in India.
The Company since its incorporation has been engaged in the business of trading and manufacturing of paper for more than four decades ("Paper Division"). During the year 2009, it diversified its business operations by commencing operations of hotel property around the unique selling proposition of being the only five-star vegetarian hotel in India ("Hotel Division"). It forged an association with the Radisson Hotel Group when it entered the hospitality business in 2009. The association has endured for a decade and a half, reinforcing an existing brand recall and sending out a message of engagement stability. The property has benefited from the global hospitality brand's reputation for engagement warmth, professional standard and benchmarking with global best practices. Any expansion of the Company's hospitality footprint would be in conjunction with the global hospitality major.
MVL is one of the leading manufacturer of rigid paper in India that finds applications in the packaging of prominent consumer electronics and food products. The existing manufacturing activities cover newsprint paper, paperboard, cup stock clay coated paper, cup stock natural shade, food container board, magnum bio pack with Nano coat food grade and high strength Kraft with an installed capacity of 85,000 TPA (tonnes per annum).
Its Paper mill products serve diverse end uses across industries. Newsprint, known for its absorbency and lightweight nature, finds its purpose in newspapers, flyers, and other printed materials. MVL is a manufacturer of newsprint of a high quality. Company's products have been consistently used by marquee media brands in India. Grey board, recognized for its sturdiness and durability, often becomes packaging material for products like shoeboxes, book covers, and various types of containers. The Company is a preferred vendor to large multinational manufacturers of consumer electronics products in India, used in the packaging of smartphones. Cup stock, a specialized paper, is tailored for liquid containment, making it ideal for disposable cups, food containers, and packaging for beverages. Its resistance to moisture and ability to maintain structural integrity even when in contact with liquids make it a popular choice for these applications. Overall, the products from paper mills cater to a wide range of needs, providing solutions for printing, packaging, and various forms of containment in everyday life and various industries. The Company has further shifted its focus to the export of prominent products (grey board also known as Royal Rhino), a preferred alternative to European board. It exports paper products to the Middle East.
The Company owns and operated a 5 Star Deluxe hotel comprising 216 rooms in Sahibabad District, bordering Delhi. The proposed hotel is located in the heart of business district of Sahibabad, in District Ghaziabad and falls under the National Capital Region. It is extremely close to Delhi city, is at a very short distance from National Highway 24 and the Inter-State Bus Terminus at Anand Vihar, Delhi. The Company's proposed Hotel is located at plot nos. 64/6 (comprising sections 3, 4, 5 & 6), and 64/5, Site-IV, Industrial Area, Sahibabad, Uttar Pradesh. As of September 30, 2023, it had 1488 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 9059433 equity shares of Rs. 10 each at a fixed price of Rs. 54 per share to mobilize Rs. 448.92 cr. The issue opens for subscription on February 07, 2024, and will close on February 21, 2024. The company is offering RI in the ratio of 2 for 11 to its eligible stakeholders as of the record date of January 25, 2024. Full money is to be paid on application for number of shares applied. Post allotment, RIs will be listed on BSE and NSE. The company is spending Rs. 2.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 34.72 cr. for purchase of new equipments, modification of existing machineries etc., and Rs. 11.45 cr. for general corporate purposes.
This RI is self-managed by the company and MAS Services Ltd. is the registrar of the issue.
Post RI, company's current paid-up equity capital of Rs. 49.83 cr. will stand enhanced to Rs. 58.89 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 317.99 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 182.41 cr. / Rs. 1.34 cr. (FY21), Rs. 331.60 cr. / Rs. 5.15 cr. (FY22), and Rs. 465.50 cr. / Rs. 70.86 cr. (FY23). For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 8.72 cr. on a total income of Rs. 235.08 cr.
The company posted spectacular bottom line for FY22, that raise eyebrows.
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 BSE WEBSITE DATA: SCRIP CODE: 532896 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 76.85 on January 24, 2024, and opened on an ex-right basis at Rs. 71.17 on January 25, 2024. Since then, it has marked a high/low of Rs. 72.99 / Rs. 64.78. The scrip last closed at Rs. 66.15 as of February 02, 2024. For the last 52 weeks' it has posted a high/low of Rs. 77.43 / Rs. 24.04.
The promoters' holding has declined from 63.23% as of September 30, 2023, to 60.70% as of January 18, 2024. The counter is well managed by the operators to pave the way and lure investors for RI.
Review By Dilip Davda on February 4, 2024
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 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: dilip_davda@rediffmail.com ).
The Magnum Ventures Rights Issue 2024 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 Magnum Ventures Rights Issue 2024 worth investing. The Magnum Ventures Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Magnum Ventures Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Magnum Ventures Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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