Parvati Sweetners RI review (May apply)

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•    PSPL is in the business of manufacturing sugar and its by-products. 
•    Though it marked growth in its top lines, its bottom line marked inconsistency. 
•    Well-informed/cash surplus investors may consider investing in this at par offer with a long-term perspective. 

Parvati Sweetners and Power Ltd. (PSPL) is engaged in the business of manufacturing sugar and its by-products. It also has a captive power plant of 4MW. Its sugar mill has a crushing capacity of 2500 TCD and is located in Gwalior (MP). As of September 30, 2022, it had 38 full-time employees on its payroll and also had 321 seasonal contract labour. 

The company is coming out with a rights issue (RI) of 58963835 equity shares of Rs. 5 each at a par value to mobilize Rs. 29.48 cr. The company is offering RI in the ratio of 17 shares for every 26 shares held by the eligible stakeholders as of the record date of February 08, 2023. The issue opens for subscription on February 21, 2023, and will close on March 08, 2023. The full amount is to be paid along with the application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.45 cr. for this RI process and from the net proceeds, it will utilize Rs. 28.50 cr. for repayment of unsecured loans, and Rs. 0.53 cr. for general corporate purposes. 

PSPL itself is managing the issue and Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. The registrar of the company is Link Intime India Pvt. Ltd. 

Post-RI, PSPL's current paid-up equity capital of Rs. 45.09 cr. will stand enhanced to Rs. 74.57 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 74.57 cr.

On the financial performance front, for the last three fiscals, the company has posted a turnover/net profit of Rs. 50.25 cr. / Rs. 0.08 cr. (FY20), Rs. 58.83 cr. / Rs. 1.62 cr. (FY21) and Rs. 71.61 cr. / Rs. 1.09 cr. (FY22). For H1 of FY23, it earned a loss of Rs. - (3.03) cr. on a turnover of Rs. 57.40 cr. Thus it marked inconsistency in its bottom lines despite growth in its top lines. 

The company has not declared any dividends for the last five years. 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. 9.78 on February 07, 2023, and opened on an ex-right basis at Rs. 8.45 on February 08, 2023. Since then, it has marked a high/low of Rs. 9.65 / Rs. 6.57. The scrip last closed at Rs. 6.57 as of February 17, 2023. For the last 52 weeks, it has posted a high/low of Rs. 12.48 / Rs. 6.57. The promoters' holding has been constant at 51.37% for the last three quarters ended on December 31, 2022. The counter is well managed above the par value to lure investors. 

Conclusion / Investment Strategy

PSPL’s financial performance is mismatched. However, as the sugar industry is poised for bright prospects ahead, well-informed/cash surplus investors may consider investing in this at par RI with a long-term perspective.

Review By Dilip Davda on Feb 18, 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 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 Parvati Sweetners and Power Ltd RI Views / Analysis / Recommendations ...

The Parvati Sweetners and Power 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 Parvati Sweetners and Power Rights Issue 2023 worth investing. The Parvati Sweetners and Power Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Parvati Sweetners and Power Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Parvati Sweetners and Power Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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