Praxis Home RI review - (May apply)

•    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.