Mittal Life Style RI review - (Avoid)

•    The company is engaged in the business of trading in denim fabrics.
•    It is totally depending on the third party contracts for its buying and selling.
•    The company posted average financial performance, but sudden boost in bottom lines for FY24 raises eyebrows.
•    The RI appears relatively fully priced mirroring its market price trends.
•    There is no harm in skipping this "High Risk/Low Return" bet.

ABOUT COMPANY:
Mittal Life Style Ltd. (MLSL) is engaged in trading of Denim Fabrics. It understands that there are endless uses for this durable and versatile fabric and it is continuously being re-invented and adapted for new innovations.

The company is focusing on sourcing of fabric designs from various manufacturers and wider distribution in India. Its flexible and responsive trading operations gives it the ability to quickly respond to change in market demand by sourcing new designs and weaves as per the customers' requirements. Strategically located in Mumbai, it is mainly catering to the customers' requirements of Mumbai and Ulhasnagar region. 

Most of its customers are garment manufacturers and have been associated with it since a long time and the company keeps on adding few new customers every year. For sourcing different types and quality of denim fabric, it has tied-up with about 22 Composite mills to get denim fabric manufactured as per its need and requirements. The Company has also tie-up with 6 logistic companies to pick denim fabric from various mills and their warehouse. As of March 31, 2024, it had 15 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 147966925 equity shares of Re. 1 each at a fixed price of Rs. 2 per share to mobilize Rs. 29.59 cr. The RI opens for subscription on October 11, 2024, and will close on October 21, 2024. The company is offering RI in the ratio of 1 for 2 to its eligible stakeholders as of the record date of October 03, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on NSE. The company is spending Rs. 0.69 cr. for this RI process, and from the net proceeds, it will utilize Rs. 21.90 cr. for working capital, and Rs. 7.00 cr. for general corporate purposes.

The issue is self- managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 29.59 cr. will stand enhanced to Rs. 44.39 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 88.78 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total revenue/net profit of Rs. 63.83 cr. / Rs. 0.53 cr. (FY23), and Rs. 68.89 cr. / Rs. 1.72 cr. (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: MITTAL (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.33 on October 01, 2024, and opened on an ex-right basis at Rs. 2.24 on October 03, 2024. Since then, it has marked high/low of Rs. 2.20 / Rs. 2.01 The scrip last closed at Rs. 2.21 as of October 08, 2024. For the last 52 weeks' it has posted a high/low of Rs. 3.13 / Rs. 1.39. 

The promoters' holding has declined to 37.49% for the last two quarter ended on June 30, 2024, from 48.98% for quarter ended December 31, 2023. The counter is well managed and quoting above the RI price, to tempt investors.