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• VCL is in the business of trading and processing of all types of fabrics.
• The company is operating in a highly competitive and fragmented segment.
• Its last two years' financial performance is non-encouraging.
• The RI is fully priced and is a "High Risk/Low Return" bet.
• Investors may skip this RI.
ABOUT COMPANY:
Vaxtex Cotfab Ltd. (VCL) was originally incorporated as "Foolproof Vyapaar Pvt. Ltd. in December 2005. After taking over this company, new management shifted its office to Gujarat in 2009. It started trading in all types of fabrics in 2014-15, and in 2017-18 it started processing fabrics. For processing work, it took over an existing plant at Rakhiyal - Ahmedabad on rentals. Currently, the company is engaged in textile processing of fabrics as job work and trading. Its installed capacity for processing of fabrics is 12 lakh meters per month. The offer document is silent on its employees' strength.
ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 63145050 equity shares of Re. 1 each at a fixed price of Rs. 2 per share to mobilize Rs. 12.63 cr. The issue opens for subscription on August 07, 2023, and will close on August 18, 2023. It is offering RI in the ratio of 1 for 2 to eligible stakeholders as of the record date of July 24, 2023. The full amount is to be paid on the application for the number of shares applied. Post allotment, shares will be listed on NSE. VCL is spending Rs. 0.55 cr. for this RI process and from the net proceeds, it will utilize Rs. 1.58 cr. for the purchase of plant and machinery and Rs. 10.50 cr. for working capital.
The issue is self-managed by the company itself and Cameo Corporate Services Ltd. is the registrar of the issue. Perhaps for the first time, we are seeing the name of the Banker to the Issue on the front page of the offer document. This appears to be an eyewash.
Post-RI, VSL's current paid-up equity capital of Rs. 12.63 cr. will stand enhanced to Rs. 18.94 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 37.89 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a turnover/net profit of Rs. 62.28 cr. / Rs. 1.49 cr. (FY22), and Rs. 76.51 cr. / Rs. 1.13 cr. It marked pressure on margins as expressed in these two years' financial data.
DIVIDEND POLICY:
The company has not declared any dividends for the last three fiscals. It has adopted a prudent dividend policy based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: VCL (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 2.35 on July 21, 2023, and opened on an ex-right basis at Rs. 2.30 on July 24, 2023. Since then, it has marked a high/low of Rs. 2.40 / Rs. 2.20. The scrip last closed at Rs. 2.30 as of August 04, 2023. For the last 52 weeks, it has posted a high/low of Rs. 12.40 / Rs. 2.00. The counter is witnessing thin trades. The counter is also well maintained above the RI pricing by the vested interests to tempt investors.
The promoters' holding has declined to 26.14% as of June 30, 2023, against 36.28% as of December 31, 2022. This raises a concern.
The counter is currently under ESM-1 (34), as per NSE website.
Review By Dilip Davda on August 5, 2023
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 ).
The Vaxtex Cotfab Rights Issue 2023 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 Vaxtex Cotfab Rights Issue 2023 worth investing. The Vaxtex Cotfab Rights Issue 2023 Note sets the Rights Issue expectations in systematic way which tells you if Vaxtex Cotfab Rights Issue 2023 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Vaxtex Cotfab Rights Issue 2023 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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