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Mittal Life Style NSE RI review (May apply)

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•    MLSL is in the business of trading in denim and bottom fabrics.
•    It trades in other textile fabrics and supplies to the textile industry.
•    It has a listless financial performance so far. 
•    Well-informed/cash surplus investors may consider parking funds in this at par RI.

MLSL came with its maiden IPO for NSE SME listing in the month of March 2018 to mobilize Rs. 4.41 cr. and issued 2100000 equity shares at a price of Rs. 21 per share. At that time the mandate was with Sarthi Capital Advisors Pvt. Ltd. Now the company is offering rights issues in the ratio of 1 for 1 at par to mobilize Rs. 14.93 cr.  This time the mandate is with Saffron Capital Advisors Pvt. Ltd. 

Mittal Lifestyle Ltd. (MLSL) is in the business of trading in denim and bottom fabrics. It supplies fashion fabrics, cotton canvas denim, dupion bottom fabrics polyester fabrics, cotton fabrics, knit fabrics etc. to the textile industry. The company has denim jeans manufacturing rights for brands - GERICHO LONDON, MITTALIEER LONDON and MCALLEN PARIS. It sells all these brands on e-commerce platforms like Flipkart, Snapdeal, Amazon, Glowroad, Limeroad, PayTM, Meesho, Shopclues, and 2GUD. 

The company has tied up with 16 composite mills to get denim fabrics as per its need and requirements. As of December 31, 2022, it had 11 employees on its payroll. 

The company is coming out with a rights issue (RI) of 14934448 equity shares of Rs.10 each at par value to mobilize Rs. 14.93 cr. MLSL is issuing RI in the ratio of 1 for 1 to eligible stakeholders as of the record date of February 13, 2023.  The issue opens for subscription on February 22, 2023, and will close on March 03, 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. MLSL is spending Rs.0.39 cr. for the RI process and from the net proceeds, it will utilize Rs. 13.65 cr. for working capital and Rs. 0.89 cr. for general corporate purposes. 

Saffron Capital Advisors Pvt. Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue.

Post RI, MLSL's current paid-up equity capital of Rs. 14.93 cr. will stand enhanced to Rs. 29.87 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 29.87 cr. 

On the financial performance front, the company has posted a turnover/net profit of Rs. 53.22 cr. / Rs. 0.26 cr. (FY21) and Rs. 52.55 cr. / Rs. 0.18 cr. (FY22). For 3Qs of FY23, it earned a net profit of Rs. 0.24 cr. on a turnover of Rs. 45.84 cr. Thus it has marked an almost static top line for the last two fiscals and some improvement for the first nine months of FY23. 

The company has not declared any dividends in the past. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 11.75 on February 10, 2023, and opened on an ex-right basis at Rs. 11.70 on February 13, 2023. Since then, it has marked a high/low of Rs. 12.40 / Rs. 11.40. The scrip last closed at Rs. 11.75 as of February 17, 2023. For the last 52 weeks, it has posted a high/low of Rs. 18.15 / Rs. 9.10. The promoters' holding has been constant at 45.07% for the last two quarters ended on December 31, 2022. The counter is well managed above the par value to lure investors.

Conclusion / Investment Strategy

MLSL’s financial track record so far is non-illusive. Its earning capacities may pose an issue for servicing the doubling equity post-RI. Well-informed/cash surplus investors may park funds in this at par offer.

Review By Dilip Davda on February 18, 2023

Review Author

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, a freelance journalist

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: ).

More Mittal Life Style Limited RI Views / Analysis / Recommendations ...

The Mittal Life Style Rights Issue 2023 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 Mittal Life Style Rights Issue 2023 worth investing. The Mittal Life Style Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Mittal Life Style Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Mittal Life Style Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.