• SAL is engaged in the manufacturing of automobile components/parts.
• The company has posted dismal performance for the reported periods.
• Considering losses incurred for the last two and half years, its asking price is on the higher side.
• Investors may consider investment for the long term.
ABOUT COMPANY:
Shivam Autotech Ltd. (SAL) is a manufacturer of transmission gears and shafts in India, serving various automobile manufacturers as their strategic and supply chain partners. From manufacturing gears for motorcycles since its incorporation to developing critical components for aerospace, the Company has diversified into multiple verticals and initiated exports as well.
The Company is involved in the manufacture of precision engineered components and systems, primarily used in the automotive sector. The Company operates within the Automotive Industry, which is well-established both domestically as well as internationally. It operates at Tier 1 level and Tier 2 level within the industry supply chain hierarchy and is an active participant in international trading, both as an importer and exporter.
The Company manufactures a comprehensive range of auto components and accessories that primarily include transmission gears, transmission shafts, alternator components, starter motor components, magneto components and steering components which are being produced through cold, warm and hot forging employing near net shape technology. The Company is an IATF 16949:2016, ISO 45001:2018 & ISO 14001:2015 certified for the manufacture of forged, machined and heat-treated components. The Company also holds the AS 9100- Rev D certification, which makes the Company eligible for supplying to all aerospace industries.
The Company has invested in state-of-the-art facilities in Bangalore and Rohtak to indigenize products for automobiles. This development gives the Company an opportunity for future exports to different overseas customers and is also a step towards the 'Make in India' initiative. The Company is promoted by DMIPL. (Dayanand Munjal Investments Pvt. Ltd.)
ISSUE DETAILS:
To part finance its needs for working capital (Rs. 8.00 cr.), adjustment of unsecured loans (Rs. 30.00 cr.) and general corporate purpose (Rs. 1.70 cr.), SAL is coming out with a rights issue (RI) of 22222222 equity shares of Rs. 2 each at a fixed price of Rs. 18 per share to mobilize Rs. 40.00 cr. The issue opens for subscription on December 31, 2021, and will close on January 28, 2022. While the company has not appointed any merchant banker for this issue and is handing it on its own, Bigshare Services Pvt. Ltd. is the registrar to the issue. The company is offering 2 right shares for every 9 shares held on the record date of December 10, 2021. Post allotment, shares will be listed on BSE and NSE. SAL will be spending Rs. 0.30 cr. for this RI process.
Post RI, SAL's current paid-up equity capital of Rs. 20 cr. will stand enhanced to Rs. 24.44 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 220 cr. As of September 30, 2021, promoters' holding was 74.80%.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, SAL has posted turnover/net profits of Rs. 588.88 cr. / Rs. - )37.13) cr. (FY20) and Rs. 490.93 cr. / Rs. - (22.53) cr. (FY21). For the first quarter of FY22 ended on June 30, 2021, it has incurred a loss of Rs. - (13.10) cr. on a turnover of Rs. 114.23 cr. The company has been posting losses for the reported periods.
DIVIDEND POLICY:
The company has not declared any dividend for the reported periods. It will adopt a prudent dividend policy going forward based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 532776.
The scrip closed on cum-right basis at Rs. 29.00 on December 08, 2021, and opened ex-right basis at Rs. 27.00 on December 09, 2021, since then it has posted a high/low of Rs. 31.00 / Rs. 23.40. It has marked 52 weeks' high/low of Rs. 34.35 / Rs. 13.97. Its last closing price is Rs. 30.65 as of December 30, 2021. Based on this price, its market cap stands at Rs. 374.61 cr. on post RI basis.
Review By Dilip Davda on December 30, 2021
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
