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Swiss Military Aug 22 RI review (May apply)

Swiss Military Consumer Goods Limited Logo

•    This is the 2nd rights issue (RI) from SMCGL within a year.
•    The first RI was in November 2021 at a par value for Rs. 9.83 cr.
•    Sudden boost in the top and bottom lines for FY22 raises eyebrows.
•    Counter is well operated by vested interest to lure investors for RI.
•    Based on its current financial data, RI is fully priced. 

ABOUT COMPANY: 
Swiss Military Consumer Goods Ltd. (SMCGL) is primarily engaged in the business of promoting, marketing and selling lifestyle products of all kinds including but not limited to travel gear, bags, key chains, mugs, golf accessories, electric and electronic products, gift items of all kinds & all other allied items, under the brand "Swiss Military".

Further, the Company has also started the business of developing, designing, manufacturing, importing, exporting, distributing Radio Frequency Identification (RFID) logistics or container seals, Radio Frequency Identification (RFID) and Geographic Information system (GIS) products & solutions and now company is ready for the next leap of business of RFID e-seal and ready to commence operation.

"Swiss Military" is an internationally renowned and celebrated Swiss brand which is duly registered in over 40 countries and has had a Global presence for many decades. Over the decades of the brand's existence, it has made a strong presence in 26 countries globally, with brand registrations in 40 countries across various product segments namely travel gear, writing instruments, watches, home appliances garments, innerwear, loungewear, accessories, kitchenware, eyewear, leather goods, outdoor/hiking, footwear, cosmetics & electronics with over 1900 present SKUs in the global portfolio. Over the years the brand has made its global footprint and is synonymous with affordable lifestyle products.

The brand is owned by M/s Promoshirt SM S.A., a Swiss Company which is a wholly owned subsidiary of M/s Promoshirt SM Private Limited, which is the holding Company of M/s Swiss Military Lifestyle Products Private Limited, an entity belonging to the Promoters of SMCGL. As of the date of this Letter of Offer, it has 70 (Seventy) employees on its payroll.

ISSUE DETAILS:
To part finance its needs for adjustment of unsecured loans from promoters (Rs. 10.00 cr.), working capital (Rs. 24.97 cr.) and general corporate purposes (Rs. 8.91 cr.), SMCGL is coming out with the right issue (RI) of 98296996 equity shares of Rs. 2 each at a fixed price of Rs. 4.5 per share to mobilize Rs. 44.23 cr. The company is issuing RI in the ratio of 1 share against 1 share held by the eligible stakeholders as of the record date i.e. July 23, 2022. The issue opens for subscription on August 10, 2022, and will close on August 25, 2022. The full amount is payable on the application. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.35 cr. for this RI process. 

The issue is solely lead managed by Turnaround Corporate Advisors Pvt. Ltd. and Alankit Assignments Ltd. is the registrar to the issue.

This is the second rights issue from SMCGL within a year. Its last RI was in November 2021 in the ratio of 1 for 1 at a par value for Rs. 9.83 cr. 

Post RI, SMCGL's current paid-up equity capital of Rs. 9.83 cr. will stand enhanced to Rs. 19.66 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 88.47 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, SMCGL has posted turnover/net profits of Rs. 4.06 cr. / Rs. - (0.20) cr. (FY20), Rs. 5.24 cr. / Rs. 0.03 cr. (FY21) and Rs. 55.70 cr. / Rs. 2.75 cr. (FY22). The quantum jump in FY22 performance raises eyebrows.

As per BSE filing data, the company has earned a net profit of Rs. 1.35 cr. on a turnover of Rs. 23.18 cr. for Q1 of FY23. 

DIVIDEND POLICY:
The company has not paid any dividends since its incorporation. 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: 523558:
The scrip last closed on cum-right basis at Rs. 27 on July 20, 2022, and opened on an ex-right basis at Rs. 17.15 on July 21, 2022. Since then it has marked a high/low of Rs. 19.30 / Rs. 15.10. The scrip last closed at Rs. 19.10 as of August 05, 2022. Based on this quote, its post-RI market cap stands at Rs. 375.49 cr. The scrip has posted the last 52 weeks high/low of Rs. 22.45 / Rs. 2.83 (post adjustment of Ex-RI impact). Promoters holding is around 66.67% for the last three quarters. The counter is being rigged by vested interest to lure investors for its second RI with a 225% higher premium than the first RI. 


Conclusion / Investment Strategy

The company is coming with its second RI within a year. It has posted good results for FY22 and also for Q1 of FY23, but the asking price is making it fully priced based on its financial performance so far. According to market circles, the counter is rigged to lure investors to this RI. Investors may consider parking of funds with a short to medium term perspective.

Review By Dilip Davda on Aug 5, 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 Swiss Military Consumer Goods Limited RI Views / Analysis / Recommendations ...

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


2 Comments

2. Amit Surana   I Like It. | Report Abuse |   Link | Aug 28, 2022 2:12:15 PM Reply
"Post RI, SMCGL's current paid-up equity capital of Rs. 9.83 cr. will stand enhanced to Rs. 19.66 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 88.47 cr."

well 19.66 was after NOV 2021 RI..
so 2022 RI will increase the Capital more naa?
Kindly confirm about it...

And if the ratio is 1:1 then the capital should get double... but the capital to raise is mentioned as 44cr+ ... maybe i am missing something...
1. Amit Surana   I Like It. | Report Abuse |   Link | Aug 28, 2022 2:06:21 PM Reply
i applied in three accounts with extra shares... lets see if i get any extra shares...