Nakoda Group RI - Sept 23 review (May apply)

• NGIL is engaged in ready-to-eat processed products.
• It has posted an average financial performance for the last two fiscals.
• FY23 marked a decline in its top and bottom lines, which raises concern.
• Well-informed investors may park funds for medium to long-term rewards.

PREFACE:
The company came with its maiden IPO in May 2018 to mobilize Rs. 6.48 cr. at a price of Rs. 35 per share. It has not marked any noteworthy performance but maintained its counters at a high level with market operations by vested interests. Now it is coming out with an RI to mobilize Rs. 6.36 cr. at Rs. 40 per share.

ABOUT COMPANY:
Nakoda Group of Industries Ltd. (NGIL) is engaged in the manufacturing of Tutti fruity (Diced Chelory) also called "Papaya Preserve" and canned and Dehydrated fruit cubes which come under the category of bakery products. The company is also engaged in processing Dry Fruits and Nuts which are imported from California and other Middle east countries by the traders in Maharashtra.

NGIL is also engaged in trading of sesame seeds, clove, cut peel murabba, karonda, rice, various seeds, and toor daal. As of March 2023, its revenue from Dry Fruits processing consists of 45.51%, manufacturing of Tutti fruity consists of 26.04%, and trading consists of 28.45%. Out of the total revenue generated from manufacturing of Tutti Fruity, 50.19% of revenue is generated from Exporting to Malaysia, Dubai, Saudi Arabia, Chili, Egypt, Qatar, and Singapore, and 49.81% is from domestic sales.

The offer document is silent on its human resources data, which raises a concern about non-transparency.

ISSUE DETAILS:
The company is offering Rights Issue (RI) of 1590642 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 6.36 cr. The issue has already opened for subscription on September 18, 2023, and will close on September 27, 2023. The company is offering RI in the ratio of 1 share for every 7 shares held to eligible stakeholders as of the record date of September 05, 2023. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 0.35 cr. for this RI process and from the net proceeds, it will utilize Rs. 5.00 cr. for working capital and Rs. 1.01 cr. for general corporate purposes.

Navigant Corporate Advisors Ltd. is the sole lead manager and Bigshare Services Pvt. Ltd. is the registrar of the issue.

Post-RI, NGIL's current paid-up equity capital of Rs. 11.14 cr. will stand enhanced to Rs. 12.73 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 50.90 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, NGIL has posted a total income/net profit of Rs. 59.98 cr. / Rs. 1.70 cr. (FY22), and Rs. 54.67 cr. / Rs. 0.91 cr. (FY23). It has posted a decline in its top and bottom lines for FY23 which raises concern. For Q1 of FY24, it earned a net profit of Rs. 0.16 cr. on a total income of Rs. 9.29 cr. As of June 30, 2023, its current paid-up equity capital of Rs. 11.14 cr. is supported by free reserves of Rs. 5.74 cr.

DIVIDEND POLICY:
The offer document is silent on the dividend policy. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. However, as per the BSE Website, it paid a dividend of 1% for FY21, 1.5% for FY22, and FY23.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 541418 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 48.72 on September 04, 2023, and opened on an ex-right basis at Rs. 48.95 on September 05, 2023. Since then, it has marked a high/low of Rs. 48.95 / Rs. 42.62. The scrip last closed at Rs. 45.00 as of September 20, 2023. For the last 52 weeks, it has posted a high/low of Rs. 150.07 / Rs. 41.66.

The promoters' holding has declined to 65.82% for the quarter ended June 30, 2023, from 67.85% for the quarter ended March 31, 2023, as well as for December 31, 2022. The counter is well managed above the par value to lure investors. The counter is under ESM - Stage I.

Conclusion / Investment Strategy

After a maiden IPO in May 2028, the company is coming out with an RI. However, it has posted an average financial performance so far and the RI appears to be a high-risk/low-return bet. Well-informed investors may park funds for medium to long-term rewards.

Review By Dilip Davda on September 20, 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 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 ).

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Nakoda Group of Industries Limited Review by Dilip Davda

The Nakoda Group of Industries 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 Nakoda Group of Industries Rights Issue 2023 worth investing. The Nakoda Group of Industries Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Nakoda Group of Industries Rights Issue 2023 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 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

Nakoda Group RI - Sept 23 review (May apply)

Conclusion / Investment Strategy

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