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Praxis Home RI review (May apply)

Praxis Home Retail Ltd Logo

•    PHRL is a future group company retailer in the home furnishing segment.
•    For the last 15 months it has posted losses.
•    The issue is lucratively priced against scrip performance on bourses.
•    Risk seekers/cash surplus investors may consider parking of funds for the long term. 

ABOUT COMPANY: 
Praxis Home Retail Ltd. (PHRL) operates consumer-driven brick and mortar stores of home furniture and home fashion in the brand name of HomeTown and caters to the home retail segment in India. This retail format brings together under one roof, a wide range of furniture (both office and home furniture), home furnishing goods, kitchenware, other home-related accessories and quality services including complete home design, modular kitchen among others, giving customers a great in-store experience.

In addition, an exciting range of accessories, such as clocks, wall hangings and décor make it a complete one-stop-shop for all home needs. As of June 30, 2021, HomeTown has a pan India presence with 44 stores, across 28 cities in India. The Company also operates a web portal for online sale of its products through the website www.hometown.in and also has its presence on the major e-commerce marketplaces in India through which it sells a wide range of products across furniture, furnishings, décor, tableware and kitchenware.

As of June 30, 2021, PHRL has 23 distribution centres with pan India coverage and two central warehouses at Nagpur and Gujarat, respectively. The business reaches the target customer base through a wide retail base. A mix of strong back-end processes and persuasive in-store communication delivers a unique customer experience. 

ISSUE DETAILS:
To part finance its plans of reducing the current liability of trade payables (Rs. 22.50 cr.), repayment of certain unsecured loans (Rs. 15.00 cr.) and general corpus fund needs (Rs. 11.04 cr.) PHRL is coming out with a rights issue (RI) of 43599433 equity shares of Rs. 5 each at a fixed price of Rs. 11.35 per share in the ratio of 11 shares for every 8 shares held on the record date of September 08, 2021. The company mulls mobilizing Rs. 49.49 cr. with this rights issue. It opens for subscription on September 21, 2021, and will close on October 05, 2021. Post allotment, shares will be listed on BSE and NSE. It will spend Rs. 0.95 cr. for the entire RI process. The issue is solely lead managed by Vivro Financial Services Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. 

Post issue, PHRL's current paid-up equity capital of Rs. 15.86 cr. will stand enhanced to Rs. 37.66 cr. Based on RI price the company is looking for a market cap of Rs. 85.48 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, PHRL has reported a turnover of Rs. 378.68 cr. with a net loss of Rs. - (103.22) cr. for FY21. For the first quarter of FY22 ended on June 30, 2021, it has posted a net loss of Rs. - (4.89) cr. on a turnover of Rs. 70.47 cr. Thus it has negative earnings for the last 15 months period. 

SCRIP PERFORMANCE ON BSE:
PHRL turned ex-right on September 07, 2021, at Rs. 28 per share. It closed at Rs. 53.65 per share on cum-right basis on September 06, 2021. Since then it has marked high/low of Rs. 35.40 / Rs. 27.75 till date. The counter has seen the last 52 weeks high/low of Rs. 35.40 /Rs. 15.99. It last quoted at Rs. 31.10 (as per Friday, September 17, 2021 closing). Based on the last traded price, the market cap comes to Rs. 234.22 cr. 


Conclusion / Investment Strategy

Though the RI price is lucrative based on its scrip performance on BSE for the last 52 weeks. But the company has been posting losses as per the last 15 month’s working and thus has a negative P/E. Considering this, risk seeker/cash surplus investors may consider an investment with a long term perspective.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Sep 18, 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

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


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