Texel Industries RI review - (May apply)

•    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.