Tierra Agro BSE RI review - (Avoid)

•    TAL is engaged in the agricultural materials like hybrid seeds/fertilizers etc.
•    It has posted negative earnings for the reported periods of the offer document. 
•    The issue is aggressively priced with a negative P/E.
•    Simply skip this "high Risk/No Return" bet. 

ABOUT COMPANY:
Tierra Agrotech Ltd. (TAL) is primarily engaged in developing, growing, raise, process, manufacture, prepare, refine, extract, hydrolyze, deodorize, grind, bleach, hydrogenate, import, export or otherwise deal in all kind of seeds, hybrid, seeds and fertilizers etc. Between 2017 and 2021, it went in for merger/acquisition/amalgamation with Grandeur Products, Xylem Seeds to become the current entity. 

The company is engaged in developing major crops like cotton, rice, corn, mustard, tomato and okra etc. Its focus now on introducing value added differentiated products with latest technologies following strict compliances with all regulatory guidelines. It ventured in to vegetable seeds sales FY21. It has an extensive marketing network in Andhra Pradesh, Telangana, Orissa, Karnataka, Tamil Nadu, Maharashtra, Bihar, Madhya Pradesh, Jharkhand, Chhattisgarh, Gujarat, Uttar Pradesh, Punjab, Haryana, West Bengal, Assam and Rajasthan. As of February 29, 2024, it had 412 employees on its payroll. 

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 9694041 equity shares of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 48.47 cr. The issue opens for subscription on March 28, 2024, and will close on April 10, 2024. The company is offering RI in the ratio of 1 for 5 to its eligible stakeholders as of the record date of March 18,2024. The full amount is to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceedings, it will utilize Rs. 27.72 cr. for working capital, Rs. 18.00 cr. for investment in wholly owned subsidiary i.e. Tierra Seed Science Pvt. Ltd., and Rs. 2.00 cr. for general corporate purposes.

The issue is self-managed by the company and Venture Capital and Corporate Investments Pvt. Ltd. is the registrar of the issue. 

Post RI, company's current paid-up capital of Rs. 55.93 cr. will stand enhanced to Rs. 65.63 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 328.13 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has (on a consolidated basis) posted a total income/net profit/ -(loss) of Rs. 58.37 cr. / Rs. - (6.27) cr. (FY21), Rs. 56.79 cr. / Rs. - (13.66) cr. (FY22), and Rs. 60.71 cr. / Rs. - (28.21) cr. (FY23). For 9M of FY24 ended on December 31, 2023, it posted a loss of Rs. - (4.74) cr. on a total income of Rs. 61.27 cr. For all the reported periods, the company has posted negative earnings resulting in some carried forward losses 

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 BSE WEBSITE DATA: SCRIP CODE: 543531 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 68.36 on March 17, 2024, and opened on an ex-right basis at Rs. 64.90 on March 18, 2024. Since then, it has marked a high/low of Rs. 65.90 / Rs. 54.38. The scrip last closed at Rs. 62.92 as of March 27, 2024. For the last 52 weeks' it has posted a high/low of Rs. 186.23 / Rs. 53.54. 

The promoters' holding has been constant at 12.25% for the last three quarters ended with December 31, 2023. The counter is well managed above the RI price to tempt investors. The counter is currently under ESM Stage-1.