Pradhin RI review - (Avoid)

•    The company is engaged in a dairy, agro product and steel segments, which are highly competitive and fragmented segments.
•    It marked inconsistency in its top and bottom lines for the reported periods.
•    The counter is well managed above RI priced by vested interests as the promoter's holding is just around 4%.
•    The issue appears aggressively priced and not in line with its financial performance. 
•    There is no harm in skipping this "High Risk/Low Return" pricey RI.

ABOUT COMPANY:
Pradhin Ltd. (PL) offers a diverse range of services across the steel and agriculture sectors and Dairy products. Its Business model is customer centric, and requires optimum utilization of existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets domestically by exploring customer needs and by maintaining the consistent quality output. As of March 31, 2024, it had just 13 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 19338640 equity shares of Rs. 10 each at a fixed price of Rs. 25.00 per share to mobilize Rs. 48.35 cr. The RI opens for subscription on November 25, 2024, and will close on December 16, 2024. The company is offering RI in the ratio of 53 for 10 to its eligible stakeholders as of the record date of November 14, 2024. 

The full amount is to be paid on application for number of shares applied. Post allotment, 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. 43.75 cr. for working capital, and Rs. 3.85 cr. for general corporate purposes. 

The issue is self-managed by the company itself, and Cameo Corporate Services Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 3.65 cr. will stand enhanced to Rs. 22.99 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 57.47 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income/net profit/ - (loss) of Rs. 17.19 cr. / Rs. - (0.10) cr. (FY23), and Rs. 5.44 cr. / Rs. 0.54 cr. (FY24). For Q1 of FY25 ended on June 30, 2024, it earned a net profit of Rs. 0.35 cr. on a total income of Rs. 0.52 cr. It reported inconsistency in its top and bottom lines for the reported periods. 

DIVIDEND POLICY:
The offer document is silent on its dividend policy.  It will adopt a prudent dividend policy based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 530095(FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 33.14 on November 13, 2024, and opened on an ex-right basis at Rs. 27.59 on November 14, 2024. Since then, it has marked high/low of Rs. 30.40 / Rs. 27.59.  The scrip last closed at Rs. 29.00 as of November 22, 2024. For the last 52 weeks' it has posted a high/low of Rs. 53.27 / Rs. 25.66.  The counter is currently under ESM: Stage 1.

The promoters' holding has declined from 8.99% (March 31, 2024) to 4.20% (September 30, 2024).  The counter is well managed by vested interests above RI pricing.