Shukra Pharmaceuticals RI review - (Neutral)

•    SPL is engaged in pharmaceutical product development and marketing.
•    Its operations so far have been on a minuscule level.
•    Though prima facie RI appears lucratively priced, its current market price is purely due to market operations by vested interest parties. 
•    Well-informed/cash surplus investors may consider investing in it, while others may avoid it. 

ABOUT COMPANY:
Shukra Pharmaceuticals Ltd. (SPL) is a fast-growing Indian pharmaceutical company engaged in developing, manufacturing and marketing a broad range of pharmaceutical products globally and domestically. Its core strength lies in developing and manufacturing differentiated pharmaceutical products in-house, which it commercializes through marketing infrastructure across geographies. SPL is engaged in the business of manufacturing pharmaceutical products. 

Its product portfolio consists of Tablet and capsules (general) Solid Oral Dosage Form and small volume parenteral- Liquid injection vials and ampules. The company is engaged in domestic as well as international business. With a market presence in PAN India, products of SPL are supplied to developed and developing countries throughout the World. To maintain its competitiveness and to further the cause of health care the company has laid a strong F&D foundation and a WHO, FDA-approved state-of-the-art manufacturing facility near Ahmedabad. SPL is a manufacturing company, so its sales strategy is to sell products in bulk to pharmaceutical marketers and traders who in turn provide the channel for sales to customers. The offer document is silent on its employees' strengths.

ISSUE DETAILS:
The company is coming out with a rights issue of 9394050 equity shares of Rs. 10 each at a fixed price of Rs.20 per share to mobilize Rs. 18.79 cr. The company is offering to the eligible stakeholders 6 shares for every 1 share held as of the record date of February 02, 2023. The issue opens for subscription on February 15, 2023, and will close on February 28, 2023. The amount to be paid on the application is Rs. 5 per share for the number of shares applied. The balance of Rs. 15 is to be paid on one or more subsequent calls by the company from time to time. Post allotment, shares will be listed on BSE. SPL is spending Rs. 0.55 cr. for this RI process and from the net proceedings, it will utilize Rs. 13.54 cr. for working capital, and Rs. 4.70 cr. for general corporate purposes. 

This RI is self-managed by the company itself. Purva Sharegistry (India) Pvt. Ltd. is the registrar of the issue. 

Post RI, SPL's current paid-up equity capital of Rs. 1.57 cr. will stand enhanced to Rs. 9.39 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 18.79 cr. A six-fold jump in equity capital may raise servicing issues.

FINANCIAL PERFORMANCE:
On the financial performance front, the company has posted a turnover/net profit of Rs. 11.55 cr. / Rs. 0.19 cr. (FY21) and Rs. 20.51 cr. / Rs. 0.75 cr. (FY22). For H1 of FY23, it earned a net profit of Rs. 0.40 cr. on a turnover of Rs. 10.32 cr. 

DIVIDEND POLICY:
The offer document is silent on the dividend policy. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. As per BSE web data, the company paid a dividend of 5% for FY19 and FY22. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 524632 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 262.60 on February 01, 2023, and opened on an ex-right basis at Rs. 57.30 on February 02, 2023. Since then, it has marked a high/low of Rs. 76.70 / Rs. 57.30. The scrip last closed at Rs. 76.70 as of February 10, 2023. For the last 52 weeks, it has posted a high/low of Rs. 80.50 / Rs. 11.13. The promoters' holding has been constant at 49.17% for the last three quarters ended on December 31, 2022. The counter is well managed above the RI value by vested interests to lure investors. Its current price is not in line with its financial performance. The counter is currently in ASM ST - Stage 2 and raises major concerns.