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Texel Industries RI review (May apply)

Texel Industries Limited Logo

•    The company is manufacturing tarpaulins and geomembranes.
•    Rights offer is priced greedily considering 52 week's low of Rs. 2.54.
•    The counter is well managed by operators to lure investors for this offer.
•    Risk seekers/cash surplus investors may consider the investment.

ABOUT COMPANY:
Texel Industries Ltd. (TIL) is engaged in the manufacturing of tarpaulins and geomembranes with experience of more than three decades. It manufactures a wide range of geosynthetic textile products which includes tarpaulins, geomembranes, vermibed, geotank, geotube, grow bags azollabed, and waterproof membrane. TIL's products are used in agriculture, aquaculture, horticulture, animal husbandry, civil engineering, water harvesting, water conservation and disaster relief, landscaping, transportation and waste management.

Presently, the company has one manufacturing facility which is located at Santej, Gandhinagar district, Gujarat. It has an installed manufacturing capacity of 9,000 MT per annum for geosynthetics textile products including tarpaulins. TIL is in the process of setting up a new manufacturing facility at Unit No. P-2, Prime Industrial and Logistic Hub, Mouje- Hariyala, Taluka & District: Kheda, Gujarat which will expand its installed manufacturing capacity by 10,080 MT per annum for geosynthetics products.


The company's products cater to different customers such as government departments, government organizations and private businesses and farmers. Its products are also sold to farmers through government tenders and market products online. The company's customers are from different industries which include agriculture, infrastructure and irrigation.

ISSUE DETAILS:
To part finance its needs for setting up of new manufacturing unit (Rs. 10.39 cr.), general corpus fund (Rs. 1.64 cr.), TIL is coming out with a rights issue in the ratio of 55 shares for every 92 shares held as on record date of August 17, 2021. The company is issuing 3122398 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 12.49 cr. The issue opens on August 31, 2021, and will close on September 14, 2021. Rs. 20 per share is to be paid on application and the balance on the first and final call. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.46 cr. for this rights issue process.

The issue is solely lead managed by Vivro Financial Services Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue.

Post issue TIL's current paid-up equity capital of Rs. 5.22 cr. will stand enhanced to Rs. 8.35 cr. (8345319 shares). Based on the rights issue pricing the company is looking for a market cap of Rs. 33.38 cr.

FINANCIAL PERFORMANCE:
For the last two fiscals, TIL has reported turnover/net profit of Rs. 95.53 cr. / Rs. 2.07 cr. (FY20) and Rs. 83.07 cr. / Rs. 2.13cr. (FY21).

As of March 31, 2021, its paid-up capital of Rs. 5.22 cr. is supported by free reserves of Rs. 15.82 cr.

SCRIP PERFORMANCE:
The scrip (BSE code 526638) last closed on cum right basis at Rs. 85.55 on August 12, 2021. It turned ex-right at Rs. 75.40 on August 13, 2021, and since then it traded between Rs. 86.75/Rs. 60.50. It has posted the last 52 weeks' high/low of Rs. 86.75/Rs. 2.54. The scrip last traded at Rs. 70.10 (on August 27, 2021). Based on the last quote, the market cap stands at Rs. 58.50 cr.


Conclusion / Investment Strategy

The counter is well managed by operators as it is quoting well above the offer price to lure investors. It has posted an average performance for the last two fiscals. Considering 52 week’s low of Rs. 2.54, the issue appears a bit risky. Hence risk seekers/cash surplus investors may consider the investment.

Reviewer recommends Subscribing to the issue for Long Term.

Review By Dilip Davda on Aug 28, 2021

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

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