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Tembo Global RI review (May apply)

Tembo Global Industries Limited Logo

•    TGIL is in manufacturing metal products and trading in textile/fabric materials. 
•    Though its top line is growing, it is witnessing pressure on margins.
•    Both segments are highly competitive and fragmented. 
•    Risk seeker/cash surplus investors may consider an investment for the long term.
 
PREFACE:
TGIL came with its maiden IPO under the name of Saketh Exim Ltd. in August 2018 at a price of Rs. 69 to mobilize Rs. 9.44 cr. At that time, the lead manager of the IPO was Aryaman Financial Services Ltd. It has already migrated to the mainboard in April 2021. It is now coming for a RI, but it has given the mandate to Fedex Securities Pvt. Ltd. this RI. 

ABOUT COMPANY:
Tembo Global Industries Ltd. (TGIL) - erstwhile known as Saketh Exim Ltd. - is an Industrial Powerhouse, with a dominant presence in the Manufacturing and Fabrication of Metal Products, used in Pipe Support Systems, Seismic Engineering, Acoustic, Fasteners, Anchors, HVAC, Anti Vibration System and types of equipment for Industrial, Commercial, Utility, and OEM Installation. It manufactures various engineering products, metal and base metal products like G. I. nuts, various types of bolts, clamps, hangers, etc. 

Its Product Portfolio includes all types of bathroom pipes, fittings, bathroom accessories, and sanitary wares. TGIL is certified by ISO 9001:2015 for manufacturing various products i.e., UL and FM-approved pipe Hangers, etc.

The Company exports its products to a variety of nations, including the United States and the Middle East, and serves a variety of sectors. It also has sales representatives with engineering expertise located throughout the Gulf, European and Asian Countries via its network of distributors for clients' convenience. We have a strong customer base both in India and abroad. 

TGIL is also engaged in textile goods trading. It deals in high-end shirting and finishing textiles. Its FY22 revenue included 53% from trading in fabrics and textile materials and the rest from manufacturing activities. As of June 30, 2022, it had 574 employees on its payroll.

ISSUE DETAILS:
To part finance its need for repayment of loans (Rs. 8.66 cr.), working capital (Rs. 19.10 cr.), and general corporate purposes (Rs. 7.96 cr.), TGIL is coming out with a rights issue (RI) of 3616560 equity shares of Rs. 10 each at a fixed price of Rs. 100 per share to mobilize Rs. 36.17 cr. It is offering 9 shares for every 25 shares held by the stakeholders as of the record date of August 10, 2022. The full amount is to be paid on the application. The issue opens for subscription on August 22, 2022, and will close on September 05, 2022. Post allotment, shares will be listed on NSE. TGIL is spending Rs. 0.45 cr. for this RI process. 

This RI is solely lead managed by Fedex Securities Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

TGIL's current paid-up equity capital of Rs. 10.05 cr. will stand enhanced to Rs. 13.66 cr. post-RI. Based on its RI pricing, the company is looking for a market cap of Rs. 136.63 cr. 

FINANCIAL PERFORMANCE: 
On the financial performance front, for the last three fiscals, TGIL has (on a consolidated basis) posted turnover/net profits of Rs.78.89 cr. / Rs. 2.39 cr. (FY20), Rs. 104.67 cr. / Rs. 2.35 cr. (FY21) and Rs. 177.91 cr. / Rs. 3.15 cr. (FY22). 

As per NSE filing, for Q1 of FY23 (unaudited), it has earned a net profit of Rs. 0.77 cr. on a turnover of Rs. 54.53 cr. Thus it has posted pressure on its margins for all these periods. 

DIVIDEND POLICY:
The company paid a dividend of 15% for FY20, 10% for FY21, and NIL for FY22. It will adopt a prudent dividend policy post listing of RI, based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP Symbol: TEMBO:
The scrip last closed on cum-right basis at Rs. 135.60 on August 05, 2022, and opened on an ex-right basis at Rs. 119.90 on August 08, 2022. Since then it has marked a high/low of Rs. 139.15 / Rs. 118.00. The scrip last closed at Rs. 124.00 as of August 11, 2022. Based on this quote, its post-RI market cap stands at Rs. 169.42 cr. The scrip has posted the last 52 weeks high/low of Rs. 312.66 / Rs. 98.13.  Promoters' holding has been at 72.77% since the last three quarters. 


Conclusion / Investment Strategy

Though the company’s top line is showing growth, its margins are under pressure. Both segments are highly competitive and fragmented. However, looking at its track record, risk seeker/cash surplus investors may park their funds with long-term perspectives.

Review By Dilip Davda on Aug 18, 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 Tembo Global Industries Limited RI Views / Analysis / Recommendations ...

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


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