Welspun Spl BSE RI review - (May apply)

•    The company is engaged in the manufacturing and marketing of superior alloy and stainless-steel products used by variety of industries globally.
•    The company has reported growth in its top lines for the reported periods, but its bottom line posted inconsistency.
•    Based on the recent set of financial performance, the issue appears aggressively priced.
•    Well-informed investors may park moderate fund in this Welspun Group pricey bet for long term. 

ABOUT COMPANY:
Welspun Specialty Solutions Ltd. (WSSL) erstwhile known as RMG Alloy Steel Ltd. is a manufacturer of superior Alloy and Stainless-Steel products, benchmarked globally. The Company stands as the integrated producer of quality seamless stainless-steel pipes and tubes, managing the entire production process from steelmaking to the finished products. Equipped with advanced technological capabilities and proven expertise, the Company specializes in manufacturing special grade steel with precisely controlled chemical compositions. The Company’s ultra-modern infrastructure, which includes an integrated steel melting shop, rolling facility, and a state-of-the-art seamless pipes plant, provides a competitive edge in timely deliveries due to its in-house steel making capabilities. The Company’s stainless steelmaking capacity is approximately 100,000 metric tons per annum, and its stainless-steel seamless pipe and tube manufacturing capacity is approximately 10,000 tons per annum.

The stainless-steel products sales volume rose by more than 130% Y-o-Y to about 15,903 tonnes. Seamless pipes and tubes sales volume rose by about 18% to 4,785 tonnes. The Company has witnessed a stable order book throughout the year, which stood at over 4,100 tonnes. Its products are utilized for varied applications, serving a diverse customer base across various industries. As of January 31, 2025, it had 696 employees on its payroll. It also hires contract labourers as and when required. 

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 132522289 equity shares of Rs. 6 each at a fixed price of Rs. 26.40 per share to mobilize Rs. 349.86 cr. The RI opens for subscription on March 10, 2025, and will close on March 19, 2025. The company is offering RI in the ratio of 1 for 4 to its eligible stakeholders as of the record date of March 01, 2025. The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE. The company is spending Rs. 2.30 cr. for its RI and from the net proceeds, it will utilize Rs. 284.00 cr. for repayment/prepayment of certain borrowings, and Rs. 63.56 cr. for general corporate purposes. 

The RI is solely lead managed by Systematix Corporate Services Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 318.05 cr. will stand enhanced to Rs. 397.57 cr. Based on RI pricing, the company is looking for a market cap of Rs. 1749.29 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit/ - (loss) of Rs. 432.59 cr. / Rs. – (13.74) cr. (FY23), Rs. 718.17 cr. / Rs. 62.47 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it marked a loss of Rs. – (8.03) cr. on a total income of Rs. 540.57 cr. Thus, the company posted inconsistency in its top and bottom lines for the reported periods. In fact, it posted losses for FY23 and 9M-FY25 and that raised concern. Based on such financial data, the issue appears aggressively priced. 

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, the offer document is silent on its dividend policy. 

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 500365 (FV Rs. 6).
The scrip last closed on cum-right basis at Rs. 37.04 on February 27, 2025, and opened on an ex-right basis at Rs. 33.19 on February 28, 2025. Since then, it has marked a high/low of Rs. 34.80 / Rs. 29.99. The scrip last closed at Rs. 32.16 as of March 07, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 55.54 / Rs. 28.93. 

The promoters’ holding has been constant at 55.17% for the last three quarters ended with December 31, 2024. The counter is well managed above the RI price to lure investors. Though the RI is at a discount of around 17.90%, it appears to be a well-managed counter above the RI price. Considering its loss-making status, it’s a bit “High Risk/Low return” bet. Welspun group tag is the only attraction.