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• SRL is in the business of silver jewellery manufacturing/trading and marketing.
• It has posted lack-luster performances for the reported periods.
• Doubling paid-up equity post-RI may lead to its servicing issue.
• There is no harm in skipping this "High Risk/Low Return" bet.
ABOUT COMPANY:
Silgo Retail Ltd. (SRL) is engaged in the business of designing, manufacturing, retailing, and wholesaling of silver jewellery. In addition to the designing and manufacturing of silver jewellery, it has recently started dealing in gem stones as well. It offers a wide range of products of silver jewellery for special occasions such as weddings and festivals to daily-wear jewellery for all ages, genders and across various price points.
Its product portfolio includes rings, earrings, bracelets, necklaces, jhumki, bangles, and customized pieces tailored that cater to customers taste, preference, choice and the ever-changing trends. Its portfolio offers customers a wide variety of traditional, Indo-western, & modern design and silver jewellery. Specializing in silver jewellery, its offerings bear the BIS hallmark certification, ensuring authenticity.
All its jewellery is crafted from 925 sterling silver. Catering to various occasions, its collection spans from special event pieces for weddings and festivals to daily wear jewellery suitable for all age, available at different price points.
SRL started dealing in gemstones starting from Fiscal year 2022, marking a significant expansion in its product offerings. Its foray into the world of gemstones signifies not just a business venture but also indicates dedication towards serving clientele with best ability.
The company was previously involved in the export of silver jewelry. However, due to the adverse effects of the COVID-19 pandemic on international markets, due to a decline in opportunities in the global market, it fulfilled existing orders and temporarily scaled back its operations. With international markets now showing signs of recovery, the company is planning to resume its focus, particularly on penetrating the US markets. As of September 30, 2023, it had 20 employees on its payroll.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 10270000 equity shares of Rs. 10 each at a fixed price of Rs. 25 per share to mobilize Rs. 25.68 cr. The issue opens for subscription on February 28, 2024, and will close on March 12, 2024. The company is offering RI in the ratio of 1 for 1 to its eligible stakeholders as of the record date of February 22, 2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE. The company is spending Rs. 0.38 cr. for this RI process, and from the net proceeds, it will utilize Rs. 12.04 cr. for repayment of unsecured loans in full, Rs. 3.65 cr. for repayment of certain secured loans, Rs. 8.55 cr. for working capital, and Rs. 1.06 cr. for general corporate purposes.
The issue is solely lead managed by Srujan Alpha Capital Advisors LLP and Bigshare Services Pvt. Ltd. is the registrar of the issue.
Post-RI, company's current paid-up equity capital of Rs. 10.27 cr. will stand enhanced to Rs. 20.54 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 51.35 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company posted a total income/net profit of Rs. 35.14 cr. / Rs. 2.31 cr. (FY22), and Rs. 34.68 cr. / Rs. 2.35 cr. (FY23). Thus it posted a static performance for the last two fiscals.
For H1 of FY24 ended on September 30, 2023, it earned a net profit of Rs. 1.30 cr. on a total income of Rs. 16.22 cr. This hints at marginal improvement in top and bottom lines arithmetically.
DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: SILGO (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 35.00 on February 21, 2024, and opened on an ex-right basis at Rs. 29.40 on February 22, 2024. Since then, it has marked a high/low of Rs. 29.40 / Rs. 28.30. The scrip last closed at Rs. 28.30 as of February 26, 2024. For the last 52 weeks' it has posted a high/low of Rs. 37.07 / Rs. 12.28.
The promoters' holding has declined from 64.63% as of December 31, 2021, to 53.24% as of December 31, 2023. The counter is well managed above the RI price to lure investors.
Review By Dilip Davda on February 26, 2024
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. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. 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 their own risk. The above information is based on information available as of date coupled with market perceptions. 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 ).
The Silgo Retail 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 Silgo Retail Rights Issue 2024 worth investing. The Silgo Retail Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Silgo Retail Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Silgo Retail Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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