Praxis Home RI June 2023 review (Avoid)

• This is the 2nd RI from PHRL since September 2021.
• The company incurred losses for FY21 and FY23.
• It has carried forward losses, a rise in paid-up equity may witness servicing issues.
• There is no harm in skipping this pricey bet.

ABOUT COMPANY:
Praxis Home Retail Ltd. (PHRL) operates brick-and-mortar stores of home furniture and home fashion under 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, and modular kitchens 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 on March 31, 2023, HomeTown has a pan-India presence with 33 stores, across 24 cities in India. It also operates a web portal for the online sale of products through the website www.hometown.in and also has its presence on the major e-commerce marketplaces in India through which the company sells a wide range of products across furniture, furnishings, décor, tableware and kitchenware. As of March 31, 2023, it had 831 employees on its payroll and also employs contract labour as and when needed.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 49185572 equity shares of Rs. 5 each at a fixed price of Rs. 10 per share to mobilize Rs.49.19 cr. The issue opens for subscription on June 06, 2023, and will close on June 14, 2023. The company is offering RI in the ratio of 13 shares for 20 shares held by the eligible stakeholders as of the record date of May 30, 2023. The full amount is to be paid along with the application for the number of shares applies. Post allotment, shares will be listed on BSE and NSE. PHRL will spend Rs. 1.44 cr. for this RI process, and from the net proceeds, it will utilize Rs. 37.50 cr. for outstanding trade payables to reduce liabilities, and Rs. 10.25 cr. for general corporate purposes.

This is the 2nd RI from the company. Its first RI was in September 2021 for mobilizing Rs. 49.49 cr. at a price of Rs. 11.35 per share.

Prime Securities Ltd. is the sole lead manager and Link Intime India Pvt. Ltd. is the registrar of the issue.

Post-RI, PHRL's current paid-up equity capital of Rs. 37.84 cr. will stand enhanced to Rs. 62.43 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 124.86 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, PHRL has posted a turnover/net profit - (loss) of Rs.378.68 cr. / Rs. - (103.22) cr. (FY21), and Rs. 481.04 cr. / Rs. 14.24 cr. (FY22). For 9M of FY 23 it posted a loss of Rs. - (8.44) cr. on a turnover of Rs. 333.49 cr. Thus it has hugely carried forward losses as of now.

As per BSE filings, PHRL has posted a turnover of Rs. 386.05 cr. with a loss of Rs. - (21.05) cr.

DIVIDEND POLICY:
The offer document is silent on the dividend policy of the company. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 540901 (FV Rs. 5).
The scrip last closed on cum-right basis at Rs. 19.48 on May 29, 2023, and opened on an ex-right basis at Rs. 18.12 on May 30, 2023. Since then, it has marked a high/low of Rs. 18.12 / Rs. 11.50 . The scrip last closed at Rs. 12.70 as of June 05, 2023. For the last 52 weeks, it has posted a high/low of Rs. 35.19 / Rs. 11.50.

The promoters' holding has declined a bit from 55.66% as of December 31, 2022, to 55.39% as of March 31, 2023. The counter is well-managed above the RI price to lure investors.

Conclusion / Investment Strategy

Though this company is the brain-child of Mr Biyani of Future Group, losses with inconsistent performance raise eyebrows. The counter is well managed by vested interest above RI pricing to lure investors. There is no harm in staying away from this fully priced issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on June 5, 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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

About Dilip Davda

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

More Praxis Home Retail Limited RI Views / Analysis / Recommendations ...

Praxis Home Retail Limited Review by Dilip Davda

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

Praxis Home RI June 2023 review (Avoid)

Conclusion / Investment Strategy

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