Zodiac-JRD BSE RI review - (May apply)

•    The company which was till now in diamond jewellery business is diversifying in to automotive components manufacturing.
•    It posted de-growth in its top and bottom lines from FY22 to FY24 with inconsistency in bottom lines. For 9M of FY25 it posted small earnings with improved top line.
•    Its diversification in automotive components is a big surprise for one and all.
•    Though the RI is at a discount of around 16.9%, it appears aggressively priced.
•    Well-informed investors may park moderate funds for medium term.

PREFACE:
The company is coming out with its RI to mobilize Rs. 23.19 cr., and is opening for subscription on May 30, 2025, and its offer document is dated May 20, 2025, with a record date was of May 21, 2025, but the offer document was uploaded on the designated exchange only on May 29, 2025 noon. Thus, delayed submission of offer documents for RI is unabatedly going on.

ABOUT COMPANY:
Zodiac-JRD-MKJ Ltd. (ZJML) is engaged in the business of cut and polished diamonds, precious and semi-precious stones, and making and trading of diamond jewellery since 1987. Currently, it deals in cut and polished diamonds, offering a wide variety to suit preferences of the end customer. The company caters to customers’ unique preferences, through understanding of the local and regional market.

Due to the pressures of the lockdown of over two years due to COVID, the factory remains closed for over two years. The management decided to sell the factory to limit losses. Currently, it does not have own manufacturing facility and is outsourcing the work of making jewellery and ornaments as and when there is a requirement through various artisans with whom it has developed relationships over the past three decades. Due to its diversity of clients and the varied regions each of clients cater to, the company has developed an ability to design jewellery products as per latest trends, fashion and demographic preference of the end customers.

It offers a wide range of products from diamond jewellery for special occasions such as weddings and festivals to daily wear jewellery for all ages, genders and across various price points. It caters to a variety of customers across mid-market and value market segments and its products are designed by in-house team of creative designers and also certain freelance designers, allowing it to manage a large and diverse portfolio of designs.

The company primarily buys and sells cut and polished diamonds of various carats, facets, colours as per requirements of the customers. It also offers a wide variety of diamond jewellery and product range includes machine made, handmade & plain diamond jewellery like necklace, chains, rings, pendants, bracelets, bangles, and other wedding jewelleries. The designing and job work of products is done either in house or by third parties on job work basis. Its primary focus has been on quality and low cost to customers.

Owing to the volatility of the diamond industry, ZJML intends to diversify its operations by venturing into the automotive industry, by acquiring VEM Tooling India Private Limited (the “Target Entity”). The Target Entity is engaged in the business of manufacturing automotive components for renowned automobile manufacturers, and have an in-house manufacturing capability. In order to tap the growing market of the automobile industry and to benefit from the increasing demand of electric vehicles, it intends to diversify its business operations by acquiring the Target Entities. As of March 31, 2025, it had just 8 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 5798443 equity shares of Rs. 10 each at a fixed price of Rs. 40 per share to mobilize Rs. 23.19 cr. The RI is opening for subscription on May 30, 2025, and will close on June 09, 2025. The company is offering RI in the ratio of 112 for 100 to its eligible stakeholders as of the record date of May 21, 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. 0.50 cr. for this RI process, and from the net proceeds, it will utilize Rs. 20.00 cr. for funding acquisition of VEM Tooling India Pvt. Ltd., and Rs. 2.69 cr. for general corporate purposes. 

The RI is self-managed by the company itself, and MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

Post RI, company’s current paid-up equity capital of Rs. 5.18 cr. will stand enhanced to Rs. 10.98 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 43.90 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, it has posted a total revenue/ net profit/ - (loss) of Rs. 19.02 cr. / Rs. 0.68 cr. (FY22), Rs. 15.10 cr. / Rs. 0.98 cr. (FY23), Rs. 10.89 cr. / Rs. – (1.37) cr. (FY24).  For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 0.47 cr. on a total income of Rs. 18.24 cr. It is highly surprising that the company is diversifying into automotive components manufacturing. 

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: 512587 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 71.52 on May 20, 2025, and opened on an ex-right basis at Rs. 54.75 on May 21, 2025. Since then, it has marked a high/low of Rs. 64.39 / Rs. 46.42. The scrip last closed at Rs. 48.15 as of May 29, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 103.54 / Rs. 36.24. 

The promoters’ holding has been constant around 30.04% for the last two quarters ended with March 31, 2025, against 33.53% for quarter ended September 30, 2024. The counter is well managed above the RI price to lure investors.