Sakuma Exports RI review (May apply)

• SEL is engaged in the trading of agro-commodities and having major trades for Sugar and Edible Oil.
• It marked degrowth in its top and bottom lines for 9M-FY24.
• Wild fluctuations in the prices of Sugar and Oil, and swinging forex has impact on the company's performances.
• The counter is well managed by vested interest above the RI price to tempt investors.
• Well-investors may park moderate funds in this "High Risk/Low Return" pricey bet.

ABOUT COMPANY:
Sakuma Exports Ltd. (SEL) is a Government recognized trading house and involved in the business of trading agro-commodities like sugar, pulses, maize, cotton, rice and other agricultural commodities. Trading of sugar by the company contributes the major part of its revenue. The company majorly exports to USA, Asia Continental, Africa Region, Fat East Asia, Europe, Australia and Middle East.

From May 2023, it started importing edible oil and re-export, but before that it had no imports and was having its purchased from Indian domestic markets. As of March 31, 2023, it had 96 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Right Issue (RI) of 78984298 equity shares of Re. 1 each at a fixed price of Rs. 25.30 to mobilize Rs. 199.83 cr. The RI opens for subscription on April 25, 2024, and will close on May 13, 2024. The company is offering RI in the ratio of 33 for 98 to its eligible stakeholders as of the record date of April 15, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 1.00 cr. for the RI process, and from the net proceeds, it will utilize Rs. 192.00 cr. for working capital, and Rs. 6.83 cr. for general corporate purposes. The tally of RI has some mismatch on the page no. 54 of the offer document. The graphics and tabular info in the offer document is blur and create difficulty in reading.

The issue is solely lead managed by First Overseas Capital Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue

Post-RI, company's current paid-up equity capital of Rs. 23.46 cr. will stand enhanced to Rs. 31.35 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 793.27 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has (on a consolidated basis) posted a total revenue/net profit of Rs.2860.32 cr. / Rs. 27.58 cr. (FY22), and Rs. 3180.40 cr. / Rs. 28.54 cr. (FY23). For 9M of FY24 ended on December 31, 2023, it earned a net profit of Rs. 13.99 cr. on a total revenue of Rs. 1630.08 cr. The recent performance indicates pressure on margins. Sugar and Edible oils are the two major commodities the company is trading in, which are the most price sensitive and has stringent norms under Government trade policy.

DIVIDEND POLICY:
The company is a dividend paying company with 0.05% dividend paid for FY22 and FY23. 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: 532713 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 25.69 on April 12, 2024, and opened on an ex-right basis at Rs. 25.18 on April 15, 2024. Since then, it has marked a high/low of Rs. 29.80 / Rs. 24.86. The scrip last closed at Rs. 28.35 as of April 23, 2024. For the last 52 weeks' it has posted a high/low of Rs. 30.62 / Rs. 11.96. The counter is currently under ASM LT: Stage 1. The counter is well managed by the vested interests and it kept above the RI price to tempt investors.

The promoters' holding has been constant at 61.88% for the last three quarters ended with MARCH 31, 2024.

Conclusion / Investment Strategy

Though the counter is trading at some premium to its offer price, based on its recent financial performance, the issue is exorbitantly priced. The company is trading it agro commodities with prime focus on Sugar and Oil, which are price sensitive and gets affected by frequently changing government policies. The company also gets affected with wild move in Forex. Well-informed investors may park moderate fund in this” High Risk/Low Return” pricey offer.

Review By Dilip Davda on April 24, 2024

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 Sakuma Exports Ltd. RI Views / Analysis / Recommendations ...

Sakuma Exports Ltd. Review by Dilip Davda

The Sakuma Exports Rights Issue 2024 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 Sakuma Exports Rights Issue 2024 worth investing. The Sakuma Exports Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Sakuma Exports Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Sakuma Exports Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

Comments

Add a public comment...

Sakuma Exports RI review (May apply)

Conclusion / Investment Strategy

Review Author

Read more about Sakuma Exports Rights Issue 2024

Comments