Padam Cotton BSE RI review - (Not Rated)

•    The company is engaged in the business of dealing, trading of textiles, garments and other allied products.
•    It has posted dicey financial performances for the reported periods.
•    The company is operating in a highly competitive and fragmented segment, it may not be able to generate the fancy margins reported for recent years.
•    Based on its recent financial data, the issue appears aggressively priced.
•    There is no harm in skipping this pricey and dicey RI bet.

PREFACE:
The company is coming out with its RI on March 02, 2026, and its record date was February 24, 2026, and the offer document is dated February 18, 2026, but the same was made available on designated stock exchange BSE only post noon of February 27, 2026. This indicates the poor compliance and the deliberations. Should one support such promoters and offers?

ABOUT COMPANY:
Padam Cotton Yarns Ltd., (PCYL) is engaged in the business of dealing and trading of textile, garments and other allied products which attracts tax liability such as Goods and Service Tax and other applicable provision of the Acts. However, the Company has been depositing the return under above applicable acts but any demand or penalty raised by concerned authority in future for any previous year and current year will affect the financial position of the Company.

Its ability to achieve financial objectives will depend on its ability to identify, evaluate and accomplish business opportunities. To grow its business, the company will need to hire, train, supervise and manage new employees and to use systems/equipment capable of effectively accommodating growth. However, it cannot assure that any such employees will contribute to the success of its business or that it will use such systems/equipment effectively. PCYL’s failure to source business opportunities effectively could have a material adverse effect on its business, financial condition and results of operations. 

It is also possible that the strategies used by the company in the future may be different from those presently in use. No assurance can be given that its analysis of market and other data or the strategies it uses or plans in future to use will be successful under various market conditions. The offer document is silent on its employees’ strength.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 90370000 equity shares of Re. 1 each at a fixed price of Rs. 2.07 per share to mobilize Rs. 18.71 cr. The RI opens for subscription on March 02, 2026, and will close on March 09, 2026. The company is offering RI in the ratio of 7 for 10 to its eligible stakeholders as of the record date of February 24, 2026. The company is asking for full money on application for number of shares applied. Post allotment, RI shares will be listed on BSE. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 15.34 cr. for working capital, and Rs. 2.62 cr. for general corporate purposes

The RI is solely lead managed by the company itself., and Beetal Financial & Computer Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 12.91 cr. will stand enhanced to Rs. 21.95 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 45.43 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total income / net profit/ - (loss), of Rs. 0.16 cr. / Rs. – (2.34) cr. (FY24), Rs. 25.21 cr. / Rs. 13.08 cr. (FY25). For H1 of FY26 ended on September 30, 2025, it posted a profit of Rs. 2.24 cr. on a total income of Rs 17.43 cr. Its NAV stood at Rs. 1.63 as of September 30, 2025. The company has posted dicey financial performances for the reported periods with unbelievable margins. The financial data pages of the offer documents are blurred and not readable properly.

DIVIDEND POLICY:
The company has paid a dividend of 10% in November 2024, and September 2025.  It will adopt a prudent dividend policy, based on its financial performance and future prospects. The offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 531395 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.61 on February 23, 2026, and opened on an ex-right basis at Rs. 2.47 on February 24, 2026. Since then, it has marked a high/low of Rs. 2.59 / Rs. 2.41. The scrip last closed at Rs. 2.43 as of February 27, 2026. For the last 52 weeks’ it has posted a high/low of Rs. 9.16 / Rs. 2.04. 

The promoters’ holding has been at NIL for the last three quarters ended December 31, 2025. The counter is currently well managed by vested interests and traded above the RI price, to lure investors.