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Natural Capsules RI review (Apply)

Natural Capsules Limited Logo

•    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. 


Conclusion / Investment Strategy

NCL is having a good track record of performance and dividend distribution. Based on its current market price, RI is coming at a discount of over 45%. Investors may consider investing in this lucratively priced RI for medium to long term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Nov 27, 2021

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 Natural Capsules Limited RI Views / Analysis / Recommendations ...

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