Quick look at Jagjanani Textiles public issue

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Jagjanani Textiles, JTL is open for subscription with a public issue of 81,00,000 equity shares of Rs 10 each at a price of Rs 25 per equity share aggregating Rs 20.25 crore.The public issue closes on February 23, 2007.

The proposed expansion and diversification projects will provide economies of scale and improve profitability. It will also enable the company to manufacture finer counts and enlarge product mix.

Issue snapshot

• Issue of 81 lakh shares at Rs 25 per share
• Allotted 10,000 shares @ issue price to Centrum Capital
• Net issue of 80.9 lakh shares
• Raising Rs 20.25 crore
• Constitutes 52% of the fully diluted post issue capital
• Issue opens on Feb 15, 2007; Issue closes on Feb 23, 2007
• Lead manager to the issue: Centrum Capital

Objects of the Issue

• Rs 54 crore investment plan; Rs 20 crore from IPO, Rs 28 crore via term loans
• To set up cotton yarn spinning unit of 6000 spindles on existing land
• To increase cotton yarn mfg capacity from 3,600 MTPA to 4,320 MTPA
• Forward integration into fabric mfg setting up weaving unit of 48 Air Jet Looms

About the company

• Engaged in manufacturing of cotton yarn and blended yarn
• Sells products in domestic market and exports to Bahrain, Dubai, Egypt, HK and Pakistan
• Installed capacity of 3600 TPA at unit near Jaipur
• Has one spinning unit and one weaving unit, both near Jaipur

FY06 Financials

• Net sales flat at Rs 27 crore
• Net profit at Rs 2.1 crore versus Rs 1.2 crore
• Operating profit at Rs 4.5 crore versus Rs 4 crore
• OPM at 16.3% versus 14.4%
• Diluted EPS at Rs 1.34

H1FY07

• Net sales of Rs 10.2 crore
• Net profit of Rs 1.25 crore
• Operating profit of Rs 2.4 crore
• OPM at 23.4%

Concerns

• Exposed to the risk of variation in cotton (raw material) and cotton yarn prices