Natural Capsules RI review - (Apply)

•    NCL is a capsules manufacturing company with a good track record.
•    It has gained ground of late with the rising pharma sector. 
•    It is a regular dividend-paying company, having RI at a discount of over 45% to the current price.
•    Investors may consider investment for the medium to long term rewards.

ABOUT COMPANY: 
Natural Capsules Ltd. (NCL) is a capsule manufacturing company in India. It has a well-equipped modern manufacturing plant at Bangalore and Pondicherry to manufacture Hard Gelatine Capsule shells, Hard Cellulose Capsule shells and Pharmaceutical Dosage Forms in Capsule Dosage Format. The Company has ensured to provide turnkey solutions to all customers. It has evolved and strengthened its endeavours by constantly innovating through excellent products. With a mission to enable "Technology-Assisted Business Transformation", NCL has ensured to deliver the best products with a technological edge.

The Company is also engaged in formulating the pharmaceutical dosage forms in Capsule dosage form, both Pharma and Nutraceutical Products. It is fully committed to upgrading its facilities on a continuous basis to meet the requirements of National and International Standards, cGMP and cGLP practices. NCL has been serving the pharmaceutical industry for over a decade, comprising of two units one at Bengaluru and the other at Pondicherry.

ISSUE DETAILS: 
NCL is coming out with its rights issue (RI) of 3116350 equity shares of Rs. 10 each at a fixed price of Rs. 100 per share to mobilize Rs. 31.16 cr. The issue opens for subscription on November 30, 2021, and will close on December 20, 2021. The company is offering 1 right share against 2 shares held as of the record date i.e. November 12, 2021. Post allotment, shares will be listed on BSE. NCL will be spending Rs. 0.35 cr. for this RI process. From the residual portion, the company use Rs. 12.81 cr. for modernization/expansion of existing capsules unit and Rs. 18.00 cr. for investment in its wholly-owned subsidiary Natural Biogenex Pvt. Ltd. 

The issue is solely lead managed by Sarthi Capital Advisors Pvt. Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. 

Investors will have to pay Rs. 25 on application and the balance Rs. 75 on one or more subsequent calls as determined by the company. 

Post RI, the company's current paid-up equity capital of Rs. 6.23 cr. will stand enhanced to Rs. 9.35 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 93.49 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last two years, the company has (on a consolidated basis) posted turnover/net profits of Rs. 62.51 cr. / Rs. 0.86 cr. (FY20) and Rs. 80.24 cr. / Rs. 6.91 cr. (FY21). Super profits of FY21 includes Rs. 2.18 cr. for exception one-time income. For Q1 of FY22, it has earned a net profit of Rs. 2.09 cr. on a turnover of Rs. 25.75 cr. (as per unaudited results). 

As of June 30, 2021, it's current paid-up equity capital of Rs. 6.23 cr. is supported by free reserves of Rs. 57.95 cr.  For the H1 of FY22 as per unaudited results, it has posted a net profit of Rs. 4.73 cr. on a turnover of Rs. 55.91 cr. As of September 30, 2021, promoters holding was 54.38%. NCL has been a dividend-paying company since July 2007 (as per BSE Website). 

SCRIP PERFORMANCE: (As per BSE website) (Scrip code: 524654)
NCL closed cum-rights at Rs. 217.40 on November 10, 2021, and opened ex-right at Rs. 178.00 on November 11, 2021. Since then it has posted a high/low of Rs. 193.20 / Rs. 153.05 and last closed at Rs. 182.85 per share on November 26, 2021. Based on its last traded price, the market cap on post RI amounts to Rs. 170.95 cr. The scrip has marked the last 52 weeks high/low of Rs. 202.87. / Rs. 60.89.