• MML is engaged in the business of automated solutions for machine tools equipment.
• Its top line marked de-growth and bottom line turned red.
• The issue appears greedily priced.
• There is no harm in skipping this pricey RI.
ABOUT COMPANY:
Marshall Machines Ltd. (MML) is in the business of designing, manufacturing, and deploying solution offerings, providing after sales services for machine tool equipment. Products offered by the Company include single spindle CNC machines, innovative two spindle & four spindle CNC machines, automated robotic CNC machine solutions, and Industry 4.0 products such as Smart Correct Gauging Stations.
The company has grown into a well-regarded player in automated solutions, smart and technologically superior machine tool offerings that enable its clients to enhance productivity, reduce cost per component, and generate a higher return on investment (ROI) from their machines. Constant product innovation, achieved via rigorous research and development, intellectual property generation and protection, has enabled the Company to produce solutions that meet the emerging needs of its clients.
The Company's machines are being used in a number of industries, including the automobile industry, consumer durables and appliances, and general engineering, among others. They are used to manufacture a variety of products such as axles, crankshafts, auto components, fans, and pumps. They are also used to manufacture bearings, gear blanks, bushes, and other similar items. These machines are well-regarded for their quality, dependability, and precision performance. In addition, MML provides its clients with the ability to create and implement customized solutions with the desired flexibility. As a result, customers' unique requirements are met with these customized solutions that are designed to maximize the efficiency with which this equipment are used in their operations. As of March 31, 2023, it had 139 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 10185000 equity shares of Rs. 10 each at a fixed price of Rs. 44.80 per share to mobilize Rs. 45.63 cr. The issue opens for subscription on October 11, 2023, and will close on October 19, 2023. The company is offering RI in the ratio of 7 for 10 to eligible stakeholders as of the record date of September 29, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on NSE. MML is spending Rs. 0.55 cr. for this RI process and from the net proceeds, it will utilize Rs. 15.15 cr. for working capital, Rs. 6.29 cr. for repayment of loans, Rs. 19.35 cr. technology fee, Rs. 4.29 cr. for general corporate purposes.
Kunvarji Finstock Pvt. Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue.
Post-RI, MML's current paid-up equity capital of Rs. 14.55 cr. will stand enhanced to Rs. 24.74 cr. Based on the RI pricing, the company is looking for a market cap of Rs.110.81 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, MML has posted a total income/net profit/ - (loss) of Rs. 67.25 cr. / Rs. Xx cr. (FY21), Rs. 60.46 cr. / Rs. - (3.12) cr. (FY22), and Rs. 37.00 cr. / Rs. - (6.89) cr. (FY23). Thus while its top line continued to decline, its earnings slipped in to red for the reported periods.
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: MARSHALL (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 59.40 on September 28, 2023, and opened on an ex-right basis at Rs. 58.45 on September 29, 2023. Since then, it has marked a high/low of Rs. 59.00 / Rs. 54.05. The scrip last closed at Rs. 55.00 as of October 06, 2023. For the last 52 weeks' it has posted a high/low of Rs. 63.16 / Rs. 21.14.
The promoters' holding has been at 52.01% as of June 30, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on October 7, 2023
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
