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Ridhi Synth RI review (Apply)

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•    RSL is active in the real estate renting business since its inception.
•    From the financial data, it's a cash-rich company.
•    RI is at par against its NAV of Rs. 364 plus. 
•    Scrip is not traded since June 23, 2016.
•    Perhaps a golden opportunity for existing shareholders.

PREFACE:
Here is the case of rare surprises. Ridhi Synthetics Ltd. has no activities in the textile segment even after the name change. It was originally established for trading in the real estate segment under the name of Ridhi Holdings & Traders Ltd. While other details are referred to in the following review, this RI has many surprises in store. A right issue from a company that has had no trade since June 23, 2016, has just 116 shareholders and a book value of Rs. 364 as of September 30, 2021. The issue at par value against the last traded price of Rs. 3.40 per share. 

ABOUT COMPANY:
Ridhi Synthetics Ltd. (RSL) is engaged in the real estate renting business. Over a period of time, the company has invested in properties across Mumbai, Maharashtra which it provides on lease to others to generate rental income. Though its name has Synthetics, it still continues real estate sector activities. As of September 30, 2021, it has just 116 shareholders.

ISSUE DETAILS:
To part finance its funding needs for working capital (Rs. 1.30 cr.) and general corporate purpose (Rs. 0.40 cr.), RSL is coming out with a rights issue of 1960000 equity shares of Rs. 10 each at par value to mobilize Rs. 1.96 cr. The company is offering 4 shares against 1 share held on the record date of December 10, 2021. The issue opens for subscription on December 20, 2021, and will close on January 03, 2022. Post allotment, shares will be listed on BSE. RSL will be spending Rs. 0.26 cr. for this RI process. Navigant Corporate Advisors Ltd. is an advisor to this issue. The issue is self-managed by the company itself and Link Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, RSL's current paid-up equity capital of Rs. 0.49 cr. will rise to Rs. 2.45 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2.45 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, RSL has posted turnover/net profit (loss) of Rs. 1.03 cr. / Rs. 0.70 cr. (FY20) and Rs. 0.57 cr. / Rs. 0.14 cr. (FY21). For the H1 of FY22 ended on September 30, 2021, it has earned a net profit of Rs. 0.40 cr. on a turnover of Rs. 0.57 cr. Margins reported by the company is mind-boggling and surprising. As of September 30, 2021, it's current paid-up equity capital of Rs. 0.49 cr. is supported by free reserves of Rs. 42.48 cr. Its NAV stands at Rs. 364.25 per share as of the same date. The company has not paid any dividend for any year.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE: SCRIP CODE (504365)
The company shares are not traded since June 23, 2016, and the last quote was of Rs. 3.40 against face value of Rs. 10 per share for June 22, 2016, with a trade of just 400 shares. Based on this quote, its market cap stands at Rs. 0.83 cr. 


Conclusion / Investment Strategy

This is an odd counter on BSE with no trade after June 22, 2016. Based on its financial status, the company is cash surplus with a book value of Rs. 364 plus, but still coming out with a rights issue at par value. No doubt it has no dividend track record and is a closely held thinly traded counter. Surprisingly the promoter’s holding as of September 30, 2021, is 36.33%. Perhaps this is a golden opportunity for the existing shareholders to grab this share at par value.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Dec 17, 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

More Ridhi Synthetics Limited RI Views / Analysis / Recommendations ...

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