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Nandani Creation RI - NSE review (Avoid)

Nandani Creation Limited Logo

•    NCL is engaged in manufacturing, designing and marketing portfolio of Indian wear for women.
•    It posted minuscule net profits for FY23 and FY24 on a static top lines.
•    Based on its FY24 earnings, the RI appears aggressively priced.
•    Though RI is lucrative against its last traded price, it's a "high Risk/Low Return" bet.
•    There is no harm in skipping this risky bet. 

Nandani Creation Ltd. (NCL) designs, manufactures, sources, promotes and sells a wide portfolio of Indian wear for women through multiple brands, namely flagship brand, "Jaipur Kurti", Premium wear Brand "Amaiva- By Jaipur Kurti", "Jaipur Kurti Luxe" and "Desi Fusion". The company weaves together the best of both ethnic and modern worlds, creating a vibrant tapestry of traditional and contemporary styles since 2012. Its products are specifically tailored for the Indian Women consumer and range of products offer distinct price points for consumers. NCL's brands are designed to cater woman's Indian wear needs, ranging from casual wear, occasion wear to office wear. 

It offers customers well-designed and high-quality products. Jaipur Kurti was created to explore the varied dynamics of Indian ethnic wear, presenting this heritage to modern women at its widest range. NCL is specializing in traditional designs, culturally rich styles and ethnic wear for women. Its products are available through a pan-India multichannel sales network that it has built over the years comprising of exclusive brand outlets ("EBOs"), own D2C website and its presence on all the prominent E-Commerce platforms such as Myntra, Nykaa Fashion, Ajio, Tata Cliq, Amazon, Flipkart etc., it has also recently started building multi-brand outlets ("MBOs") network by opening SIS Outlets in various cities - such as Varanasi, Lucknow, Haridwar, Gorakhpur, Punjab, Shimla, Chandigarh, Jammu & Kashmir etc.

As of March 31, 2024, it had 13 EBOs, comprising 08 Company Owned and Company Operated (COCO) stores and 05 Franchisee Owned and Franchisee Operated (FOFO) stores across 8 states in India. Its well-established EBO network is not only well diversified across major regions of India but also offers a superior shopping experience for customers. NCL's EBOs are located nationwide across high streets, malls and residential market areas in major cities to cater consumer needs. The opening of its Retail Stores in various parts of India aims to enhance brand engagement and create an immersive shopping experience. It also believes expanding of retail touchpoints will mark an important milestone in its journey and will help in boosting efforts towards enhancing retail footprint, expanding the reach of brands, and making relentless progress on own proprietary platform's D2C journey. As of June 25, 2024, it had 145 employees on its payroll and also hires temporary labours on need basis. 

The company is coming out with a Rights Issue (RI) of 5327656 equity shares of Rs. 10 each at a fixed price of Rs. 30.00 per share to mobilize Rs. 15.98 cr. The RI opens for subscription on July 12, 2024, and will close on July 23, 2024. The company is offering RI in the ratio of 100 for every 224 shares held by its stakeholders as of the record date of July 04, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE. The company is spending Rs. 0.30 cr. for this RI process, and from the net proceeds, it will utilize Rs. 6.00 cr. for investment in subsidiary Desi Fusion Pvt. Ltd. for its working capital, Rs. 6.00 cr. for working capital, Rs. 3.68 cr. for general corporate purposes. 

This RI is solely lead managed by Srujan Alpha Capital Advisors LLP, and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 11.93 will stand enhanced to Rs. 17.26 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 51.79 cr. 

On the financial performance front, for the last two fiscals, the company posted a total revenue/net profit of Rs.49.54 cr. / Rs. 0.06 cr. (FY23), and Rs.  45.85 cr. / Rs. 0.03 cr. (FY24). Thus while its top line remained almost static, it marked negligible profits indicating capital servicing issues. Perhaps higher equity post-RI will worsen this situation.

Company's offer document is silent on its dividend policy. It has not declared any dividends for the reported periods. 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. 53.52 on July 03, 2024, and opened on an ex-right basis at Rs. 43.94 on July 04, 2024. Since then, it has marked a high/low of Rs. 50.49 / Rs. 43.94. The scrip last closed at Rs. 44.98 as of July 10, 2024. For the last 52 weeks' it has posted a high/low of Rs. 83.48 / Rs. 36.35. The counter is currently under ESM-2. 

The promoters' holding has declined to 49.31% as of June 14, 2024 against 51.46% for the last two quarters ended on March 31, 2024 and December 31, 2023 respectively. The counter is well managed above the RI price to tempt investors. 

Conclusion / Investment Strategy

The company is in the business of manufacturing, designing and marketing of variety portfolio of Indian women wears. It is operating in a highly competitive and fragmented segment. It marked minuscule profits on almost static top lines for the last two fiscals. Based on its last traded price, though RI appears lucrative, it’s a “High Risk/Low Return” bet. There is no harm in skipping this risky bet.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on July 10, 2024

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 Nandani Creation Limited RI Views / Analysis / Recommendations ...

The Nandani Creation 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 Nandani Creation Rights Issue 2024 worth investing. The Nandani Creation Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Nandani Creation Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Nandani Creation Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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