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• MCPL is in the packaging materials production and marketing.
• It marked declining trends in its bottom lines for the past 18 months.
• The company is operating in a highly competitive and fragmented segment.
• The issue is fully priced discounting all near term positives.
• Well-informed/cash surplus investors may park moderate funds for the medium term rewards.
ABOUT COMPANY:
Mitsu Chem Plast Ltd. (MCPL) is a packaging solutions provider engaged in the business of manufacturing polymer based molded products mainly used for industrial packaging for industries like chemicals, agrochemicals, pharmaceuticals, lubricants, food and edible oil. It also manufactures polymer based molded hospital furniture parts which are supplied to hospital furniture manufacturing companies. The company also caters to the polymer-based product requirements of various other industries including automobile and infrastructure. It uses blow molding and injection molding technologies for manufacturing products.
MCPL's products are marketed and sold under the registered brand name "Mitsu" having more than 500 SKUs catering to more than 500 clients on a continuous basis. It has three (3) strategically located manufacturing units out of which two (2) are situated at Tarapur MIDC, Maharashtra and the third unit is situated at Khalapur, Maharashtra. The total installed capacity of manufacturing units is 24,219 MTPA.
It undertakes in-house research and development for designing solution based polymer products which help its clients in solving issues faced by them. The company has developed various new products either independently or in consultation with clients. It has registered eight (8) designs for hospital bed parts like head bow and foot bow. The company has also applied for registration of a patent for head and foot bows for hospital bed with inbuilt cardio pulmonary resuscitation board (CPR) profile.
As of the date of filing this offer document, it had 439 employees on its payroll. It also hires contract workers as and when needed.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 1509075 equity shares of Rs. 10 each at a fixed price of Rs. 144 per share to mobilize Rs. 21.73 cr. The issue opens for subscription on February 26, 2024, and will close on March 04, 2024. The company is offering RI in the ratio of 1 for 8 to its eligible stakeholders as of the record date of February 17, 2024. The company is asking for Rs. 72 per share to be paid along with application for the number of shares applied, and the balance by one call as may be decided by the committee of the board. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.25 cr. for this RI process and from the net proceeds, it will utilize Rs. 15.00 cr. for repayment/prepayment of certain borrowings, Rs. 2.23 cr. for working capital, and Rs. 4.25 cr. for general corporate purposes.
The issue is self-managed by the company and Bigshare Services Pvt. Ltd. is the registrar of the issue.
Post-RI, company's current paid-up equity capital of Rs. 12.07 cr. will stand enhanced to Rs. 13.58 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 195.58 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total revenue/net profit of Rs. 258.86 cr. / Rs. 11.50 cr. (FY22), and Rs. 309.33 cr. / Rs.11.81 cr. (FY23). For H1 of current fiscals, it earned a net profit of Rs. 2.85 cr. on a total revenue of Rs. 156.00 cr. Thus its margin has posted degrowth for the last 18 months' period.
DIVIDEND POLICY:
The company has paid a token dividend of just 2% for the last three fiscals. 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: 540078 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 194.10 on February 15, 2024, and opened on an ex-right basis at Rs. 187.85 on February 16, 2024. Since then, it has marked a high/low of Rs. 187.85 / Rs. 175.20. The scrip last closed at Rs. 177.45 as of February 23, 2024. For the last 52 weeks' it has posted a high/low of Rs. 222.16/ Rs. 132.49.
The promoters' holding has been constant at 73.03% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on February 25, 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 Mitsu Chem Plast 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 Mitsu Chem Plast Rights Issue 2024 worth investing. The Mitsu Chem Plast Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Mitsu Chem Plast Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Mitsu Chem Plast Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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