Ultracab (India) RI review - (May apply)

•    The company is engaged in manufacturing and marketing of PVC cables and wires.
•    It marked steady growth in its top and bottom lines for the reported period.
•    The company is operating in a highly competitive and fragmented segment.
•    Based on the set of financial performance, the issue appears fully priced.
•    Well-informed investors may park moderate funds for medium term.

ABOUT COMPANY:
Ultracab (India) Ltd. (UIL) is engaged in the business of Manufacturing Wires & Cables in India. It is using advanced technology and machineries for manufacturing quality products. It started business with PVC cables and wires in India which are now supplied across different networks worldwide. Its products are sold not only in India but also in countries like UK, UAE, Africa, Singapore etc. UIL’s manufacturing facility is situated at Shapar (Rajkot, Gujarat) India. 

Its facility has modern technology, tools, high-tech machines which spin out the quality standard of cables. It has a well-equipped research and development unit that helps immensely to offer innovative products to clients. R & D is always a boon for staying ahead of others in this extremely competitive environment and its cables and wires have always assisted in the growth of a substantial segment of
Indian industry. 

Its manufacturing facility, spread over 11483.19 sq. Mtr area and has 100 per cent in-house facility from wire drawing machine until testing of finished products. The Company has purchased additional Machinery to enhance the production capacities of power and control cables in the past few years. As of September 30, 2024, it had 105 employees on its payroll.

ISSUE DETAILS:
The company is coming out with Rights Issue (RI) of 34352100 equity shares of Rs. 2 each at a fixed price of Rs. 14.50 per shares to mobilize Rs. 49.81 cr. The RI is opening for subscription on January 28, 2025, and will close on February 11, 2025. The company is offering RI in the ratio of 9 for 25 to its eligible stakeholders as of the record date of January 16, 2025. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 22.32 cr. for repayment/prepayment of certain loans, Rs. 22.08 cr. for working capital, and Rs. 4.91 cr. for general corporate purposes. 

The RI is self-managed by the company, and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company’s current paid-up equity capital of Rs. 19.08 cr. will stand enhanced to Rs. 25.95 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 188.17 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted total income/net profit of Rs. 107.67 cr. / Rs. 5.82 cr. (FY23), and Rs. 124.39 cr. / Rs. 5.98 cr. (FY24). For H1 of FY25 ended on September 30, 2024, it earned a net profit of Rs. 4.63 cr. on a total income of Rs. 109.33 cr. Thus it marked steady growth in its top and bottom lines for the reported periods.

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. However, its offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 538706 (FV Rs. 2).
The scrip last closed on cum-right basis at Rs. 16.14 on January 15, 2025, and opened on an ex-right basis at Rs. 16.00 on January 16, 2025. Since then, it has marked a high/low of Rs. 16.29 / Rs. 14.90. The scrip last closed at Rs. 15.19 as of January 24, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 20.48 / Rs. 11.99. 

The promoters’ holding has been constant at 27.90% for the last three quarters ended with December 31, 2024. The counter is well maintained above the RI price to tempt investors.