- 10 Oct 2022
- ICICIdirect Research
Atul Auto board approves issue of warrantsATULAUTO - 343 Change: 5.10 (1.51 %)
In a regulatory exchange filing, Atul Auto informed exchanges about a preferential issuance of Rs 115 crores worth of warrants (i.e. 58,08,080 warrants @ Rs 198 per warrant) to promoters and non promoters of the company (Vijay Kishanlal Kedia¬) each convertible into one equity share of the company within a maximum period of 18 months from date of allotment. Net debt on a standalone basis at the company was at Rs 75 crore as of FY22.
Atul Auto is a prominent 3-W manufacturer based out of Gujarat with broad-based presence across segments and fuel types. The company has production capacity of 1.2 lakh units per annual with FY22 sales volume pegged at ~16,000 units i.e. significantly underutilised. With a market capitalisation of Rs 470 crore and 2.2 crore shares outstanding, this is a significant capital raise resulting in 25%+ dilution. With marquee investor again coming in with a substantial stake (~18% stake), it remains to be seen as to what are the long term growth opportunities at the company as its base business is on a slower than anticipated recovery path. One possibility could be contract manufacturing for an upcoming electric 3-W player domestically. On the operational front, a key monitorable in the near term is launch of its electric auto.