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RSWM Ltd RI review (Apply)

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•    RSWM is a flagship company of LNJ Bhilwara group.
•    It is engaged in the manufacturing of high-quality cotton, melange, synthetic, and novelty yarns. 
•    The company has returned to the dividend-paying list for FY22.
•    The issue is at a discount of around 86.5% to the last traded price.
•    Investors should grab this opportunity to subscribe for medium to long-term rewards.

ABOUT COMPANY:
RSWM Ltd. (RSWM) erstwhile known as Rajasthan Spinning and Weaving Mills Ltd. is a part of LNJ Bhilwara group - which is engaged in various sectors such as graphite electrodes, textile, power generation, and IT services. RSWM is a manufacturer of high-quality cotton, melange, synthetic, and novelty yarns along with knitted and denim fabrics. The company is in the B2B segment selling its products to other textile units for further processing. As of March 31, 2022, it has 16615 employees on its payroll.

ISSUE DETAILS:
To part finance its need for repayment of certain borrowings (Rs. 134.10 cr.), working capital (Rs. 70.00 cr.), and general corporate purposes (Rs. 27.66 cr.), RSWM is offering 23550842 equity shares of Rs. 10 each at a fixed price of Rs. 100 per share as a rights issue to eligible shareholders who were holding shares as of the record date of December 16, 2022. The company is issuing RI in the ratio of 1 for 1 and mulls mobilizing Rs. 235.51 cr. The issue opens for subscription on December 23, 2022, and will close on January 06, 2023. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE and NSE. RSWM is spending Rs. 3.75 cr. for this RI process. 

The issue is solely lead managed by SKP Securities Ltd., and KFin Technologies Ltd. is the registrar of the issue. 

Post RI, RSWM's current paid-up equity capital of Rs. 23.55 cr.  will stand enhanced to Rs. 47.10 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 471.02 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, RSWM has (on a consolidated basis) posted a turnover/net profit of Rs. 2365.43 cr. / Rs. 20.83 cr. (FY21), and Rs. 3849.54 cr. / Rs. 246.22 cr. (FY22).

For the first half of FY23 ended on September 30, 2022, it earned a net profit of Rs. 91.49 cr. on a turnover of Rs. 2018.41 cr.  Its NAV stood at Rs. 447.83 at the end of H1 FY23. 

DIVIDEND POLICY:
RSWM last paid a dividend of 20% for FY18 and thereafter it skipped the same. It returned to the dividend-paying list with a 250% dividend for FY22. 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: 500350 (FV Rs. 10).
The scrip last closed at Rs. 355.50 on December 15, 2022, as cum-right and opened at Rs. 223.00 as ex-right on December 16, 2022. Since then it has marked a high/low of Rs. 223.00 / Rs. 185.05 till this date of the review. It last closed at Rs. 186.50 as of December 22, 2022, and has marked the last 52 weeks' high/low of Rs. 367.04 / Rs. 182.04. Considering RI at an attractive discount of around 86.5% on its last trading price, it is worth considering. The promoter's holding has been at 53.16% for the last three quarters.


Conclusion / Investment Strategy

RSWM is a well-known textile company of the LNJ Bhilwara group. It is now on track with super performance and a handsome dividend for FY22. RI at a discount of around 86.5% to its last quote is an attractive and not to miss the offer. Investors should grab it for medium to long-term rewards.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Dec 22, 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. 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 RSWM Ltd. RI Views / Analysis / Recommendations ...

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


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