RSWM Ltd RI review (Apply)

RSWM Ltd RI review (Apply)


•    RSWM is a flagship company of LNJ Bhilwara group.
•    It is engaged in the manufacturing of high-quality cotton, melange, synthetic, and novelty yarns. 
•    The company has returned to the dividend-paying list for FY22.
•    The issue is at a discount of around 86.5% to the last traded price.
•    Investors should grab this opportunity to subscribe for medium to long-term rewards.

RSWM Ltd. (RSWM) erstwhile known as Rajasthan Spinning and Weaving Mills Ltd. is a part of LNJ Bhilwara group – which is engaged in various sectors such as graphite electrodes, textile, power generation, and IT services. RSWM is a manufacturer of high-quality cotton, melange, synthetic, and novelty yarns along with knitted and denim fabrics. The company is in the B2B segment selling its products to other textile units for further processing. As of March 31, 2022, it has 16615 employees on its payroll.

To part finance its need for repayment of certain borrowings (Rs. 134.10 cr.), working capital (Rs. 70.00 cr.), and general corporate purposes (Rs. 27.66 cr.), RSWM is offering 23550842 equity shares of Rs. 10 each at a fixed price of Rs. 100 per share as a rights issue to eligible shareholders who were holding shares as of the record date of December 16, 2022. The company is issuing RI in the ratio of 1 for 1 and mulls mobilizing Rs. 235.51 cr. The issue opens for subscription on December 23, 2022, and will close on January 06, 2023. The full amount is to be paid along with the application. Post allotment, shares will be listed on BSE and NSE. RSWM is spending Rs. 3.75 cr. for this RI process.

The issue is solely lead managed by SKP Securities Ltd., and KFin Technologies Ltd. is the registrar of the issue.

Post RI, RSWM’s current paid-up equity capital of Rs. 23.55 cr.  will stand enhanced to Rs. 47.10 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 471.02 cr.

On the financial performance front, for the last two fiscals, RSWM has (on a consolidated basis) posted a turnover/net profit of Rs. 2365.43 cr. / Rs. 20.83 cr. (FY21), and Rs. 3849.54 cr. / Rs. 246.22 cr. (FY22).

For the first half of FY23 ended on September 30, 2022, it earned a net profit of Rs. 91.49 cr. on a turnover of Rs. 2018.41 cr.  Its NAV stood at Rs. 447.83 at the end of H1 FY23.

RSWM last paid a dividend of 20% for FY18 and thereafter it skipped the same. It returned to the dividend-paying list with a 250% dividend for FY22. It will adopt a prudent dividend policy post-listing of RI based on its financial performance and future prospects.

The scrip last closed at Rs. 355.50 on December 15, 2022, as cum-right and opened at Rs. 223.00 as ex-right on December 16, 2022. Since then it has marked a high/low of Rs. 223.00 / Rs. 185.05 till this date of the review. It last closed at Rs. 186.50 as of December 22, 2022, and has marked the last 52 weeks’ high/low of Rs. 367.04 / Rs. 182.04. Considering RI at an attractive discount of around 86.5% on its last trading price, it is worth considering. The promoter’s holding has been at 53.16% for the last three quarters.

Conclusion / Investment Strategy

RSWM is a well-known textile company of the LNJ Bhilwara group. It is now on track with super performance and a handsome dividend for FY22. RI at a discount of around 86.5% to its last quote is an attractive and not to miss the offer. Investors should grab it for medium to long-term rewards.