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Roni Households BSE SME RI review (Avoid)

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•    RHL is involved in Agri commodity trading and plastic household manufacturing activities.
•    It has posted inconsistency in its bottom lines for the reported periods. 
•    The counter is well operated with vested interest parties despite thin volumes.
•    Considering its financial data, this RI is aggressively priced. 
•    There is no harm in skipping it. 

PREFACE:
RHL came with its maiden IPO at a fixed price of Rs. 20 per share in November 2018 and still continues to be on the SME platform. With minuscule financial performance, the counter was well operated with thin volumes by vested interest. This right issue also comes with aggressive pricing.  

ABOUT COMPANY:
Roni Households Ltd. (RHL) is currently in the business of Trading Agricultural Commodities and Manufacturing plastic household products which majorly involves kitchenware and bath ware products and other household products etc. The Company is even engaged in trading Agricultural Commodities. 

RHL's revenue mix is 4.95% from manufacturing activities and the rest from trading activities. As of July 31, 2022, it has 8 employees on its payroll. 

ISSUE DETAILS:
To part finance its needs for adjustment of unsecured loans from the promoters (Rs. 3.63 cr.), repayment of the loan from SBI (Rs. 0.50 cr.), working capital (Rs. 1.03 cr.), and general corporate purposes (Rs. 0.75 cr.), RHL is offering rights issue (RI) of 867189 equity shares of Rs. 10 each at a fixed price of Rs. 70 per share to mobilize Rs. 6.07 cr. It is offering RI in the ratio of 1 share for every 5 shares held as of the record date of November 25, 2022, to the eligible shareholders. The issue opens for subscription on December 09, 2022, and will close on December 23, 2022. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE SME. RHL is spending Rs. 0.16 cr. for this RI process. The market lot for this RI will be 300 shares. 

Aryaman Financial Services Ltd. is the sole lead manager for this issue and Bigshare Services Pvt. Ltd. is the registrar of the issue.

Post-RI, RHL's current paid-up equity capital of Rs. 4.34 cr. will stand enhanced to Rs. 5.20 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 36.42 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, RHL has posted a turnover/net profit - (loss) of Rs. 10.69 cr. / Rs. 0.16 cr. (FY21), and Rs. 10.76 cr. / Rs. - (1.26) cr. (FY22). For the H1 of FY23 ended on September 30, 2022, it earned a net profit of Rs. 0.12 cr. on a turnover of Rs. 2.23 cr.  Thus it has posted inconsistency in its bottom lines. 

DIVIDEND POLICY:
RHL has no track record of any dividend payouts. It will adopt a prudent dividend policy post-listing of RI, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 542145 (FV Re. 10).
The scrip closed at Rs. 104.00 on cum-right basis as of November 22, 2022, and thereafter it has not marked any trading on BSE Exchange. Thus it has no data for a high/low post-turning ex-right. It last closed at Rs. 104.00 as of November 22, 2022. The scrip has posted the last 52 weeks' high/low of Rs. 130.00 / Rs. 90.00 with planned operations on a thin volume. The promoter's holding has been constant at 59.66% for the last three quarters ended on September 30, 2022. 


Conclusion / Investment Strategy

Based on its financial data, the issue is aggressively priced. The counter is well-operated and managed by vested interests. There is no harm in skipping this costly RI.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 7, 2022

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. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

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.

Email: dilip_davda@rediffmail.com

More Roni Households Limited RI Views / Analysis / Recommendations ...

The Roni Households Rights Issue 2022 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 Roni Households Rights Issue 2022 worth investing. The Roni Households Rights Issue 2022 Note sets the Rights Issue expectations in systematic way which tells you if Roni Households Rights Issue 2022 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Roni Households Rights Issue 2022 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.


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