Nakoda Group RI review (May apply)

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•    NGIL is in the business of processed foods and trading activities. 
•    It has posted an average financial performance so far. 
•    It operates in highly competitive and fragmented segments. 
•    The RI is aggressively priced at 133+ P/E. 
•    Cash surplus investors may consider an investment with a long term perspective. 

Nakoda Group of Industries Ltd. (NGIL) is engaged in manufacturing of Tutti fruity (Diced Chelory) also called "Papaya Preserve" and canned & Dehydrated fruit cubes which comes under the category of bakery products. It is also engaged in the processing of Dry Fruits & Nuts which are imported from California and other Middle-east countries by the traders in Maharashtra. The company is also engaged in the trading of sesame seeds, clove, cut peel murabba, karonda, rice, various seeds and toor daal. As of January 2022, its revenue from Dry Fruits processing consists of 41.40%, manufacturing of Tutti fruity consists of 27.70% and trading consists of 30.90%. Out of the total revenue generated from the manufacturing of Tutti Fruity, 41.34% of revenue is generated from Exporting to Malaysia, Dubai, Saudi Arab, Chili, Egypt, Qatar, Singapore, and 58.66% is from the domestic sale.

NGIL sells its products to brands like Mapels, Havmor, Haldiram's, Parle, Britannia, Hindustan Unilever, ITC, Vadilal, Dinshaw's, Havemore Ice Cream, Harvest Gold, Amul, Bisk Farm etc.

The company is coming out with a rights issue (RI) of 2783625 equity shares of Rs. 10 each at a fixed price of Rs. 120.00 per share to mobilize Rs. 33.40 cr. The company is offering rights shares in the ratio of 1 for 4 to shareholders registered with it as of the record date of April 01, 2022. The issue opens for subscription on April 18, 2022, and will close on May 02, 2022. Post allotment, shares will be listed on BSE and NSE. NGIL is spending Rs. 0.27 cr. for this RI process. From the residual portion, it will spend Rs. 6.43 cr. for repayment/prepayment of certain borrowings, Rs. 18.40 cr. for working capital and Rs. 8.30 cr. for general corporate purposes. 

The issue is solely lead managed by Shreni Shares Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post RI, NGIL's current paid-up equity capital of Rs. 11.13 cr. will stand enhanced to Rs. 13.92 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 167.02 cr.

For fiscal 2021, NGIL posted turnover/net profits of Rs. 30.88 cr. / Rs. 1.32 cr. and for the first nine months of FY22 ended on December 31, 2021, lit has earned a net profit of Rs. 1.60 cr. on a turnover of Rs. 39.75 cr. 

Promoters' holding has been constant at 73.67% for the last three quarters. 

The company has not paid any dividends and may not be able to pay any dividends in the near/medium term. (Refer to page 26 of the offer document).  It will adopt a prudent dividend policy based on its financial performance and future prospects. 

The scrip last closed on cum-right basis at Rs. 235.65 on March 29, 2022, and opened on the ex-rights basis at Rs. 210.00 on March 30, 2022. Since then, it has posted a high/low of Rs. 231.90 / Rs. 187.15. It last closed at Rs. 230.80 as of April 13, 2022, and based on this quote, its market cap on a fully diluted post RI equity base comes to Rs. 321.23 cr. The scrip has posted the last 52 weeks' high/low of Rs. 301.90 / Rs. 22.55. It appears that to get a better valuation and lure investors the counter is well operated on the bourses. 

Conclusion / Investment Strategy

The company is in a highly competitive and fragmented segment with many local and multinational players. It has posted an average financial performance so far. Based on its financial track record, this RI is aggressively priced. Cash surplus investors may consider the parking of funds from a long term perspective.

Review By Dilip Davda on Apr 14, 2022

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 information published here. Any reader taking decisions based on any information published here does so entirely at its 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.

(SEBI registered Research Analyst-Mumbai).

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.

Email: dilip_davda@rediffmail.com

More Nakoda Group of Industries Limited RI Views / Analysis / Recommendations ...

The Nakoda Group of Industries Rights Issue 2022 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 Nakoda Group of Industries Rights Issue 2022 worth investing. The Nakoda Group of Industries Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Nakoda Group of Industries Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Nakoda Group of Industries Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


1. Ayushi gupta     Link|May 17, 2022 8:59:20 PM
Right issue kab tak credit honge