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.

Conclusion / Investment Strategy

Though this RI is at a discount of around 20%, it’s a highly priced issue as the company has been posting losses for the reported periods and RI is priced with a negative P/E. The counter is manipulated and maintained above RI price to tempt investors. Low promoter holding is also a concern. Simply stay away from this pricey and dicey issue.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on March 28, 2024

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 the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their 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.

About Dilip Davda

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.

(Dilip Davda -SEBI registered Research Analyst-Mumbai,

Registration no. INH000003127 (Perpetual)

Email id: dilip_davda@rediffmail.com ).

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Tierra Agrotech Ltd Review by Dilip Davda

The Tierra Agrotech Rights Issue 2024 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 Tierra Agrotech Rights Issue 2024 worth investing. The Tierra Agrotech Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Tierra Agrotech Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Tierra Agrotech Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.

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Tierra Agro BSE RI review (Avoid)

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