Kshitij Polyline raises Rs 25 crores, plans strategic growth and stake in Tata

VMPL

New Delhi (India), August 3: Kshitij polyline raises 25 crores from rights issue. TATA plans to acquire 20 per cent stake in the company. Analyst recommends buy with a one-year target of 150/- per share.

The company raised Rs 25 crores from the recently closed rights issue. “The proceeds from this rights issue will be strategically utilised to reduce our debt and purchase new machinery, in line with our objectives of sustainable growth and enhanced operational efficiency. As a result, we expect our current funding cost of Rs 217.98 lakhs to reduce by over 50 per cent, while our production capacity is expected to increase by 30-40 per cent in fiscal 2025,” the company said.

According to the company, it has emerged as the highest bidder for Omkar Speciality Chemicals, with a bid of around ₹23.14 crores. This acquisition has been approved by the committee of creditors and is currently awaiting final approval from the National Company Law Tribunal (NCLT).

The company would also use a portion of the proceeds in its waste management project. This is a big boost for the company. There are market rumours that TATA is planning to acquire a significant stake in the company at around 50/-. The company has a bright future and prospects. Market analysts are targeting 150/- shares in a period of 1 year.

Analysis of recent events at Kshitij Polyline and analysts’ recommendations at 150/- for the stock over the next 12 months.

1. Issue of subscription rights and use of funds:

Kshitij Polyline has successfully raised Rs 25 crores through a rights issue. The company plans to strategically utilize the funds:

– Debt reduction and machinery purchase: The main objectives are debt reduction and investment in new machinery. This strategy aims to increase operational efficiency and support sustainable growth.

– Expected Financial Impact: The company is anticipating a significant reduction in financial costs, potentially in excess of 50 percent. Additionally, production capacity is expected to increase by 30-40 percent in fiscal 2025, indicating a solid growth trajectory.

2. Acquisition of Omkar Specialty Chemicals:

Kshitij Polyline emerged as the highest bidder for Omkar Speciality Chemicals, offering around Rs 23.14 crores. This acquisition is subject to final approval by the National Company Law Tribunal (NCLT) after approval by the committee of creditors. The move suggests strategic expansion and diversification in the chemical sector.

3. Waste management project:

A portion of the rights issue proceeds will also go towards a waste management project. This demonstrates the company’s commitment to environmental sustainability and regulatory compliance, potentially strengthening its corporate social responsibility profile.

4. Rumors of a strategic partnership with Tata:

There are market rumours suggesting that Tata Group is considering acquiring a significant stake in Kshitij Polyline at a speculative price of around Rs 50 per share. If this goes through, the partnership could provide significant strategic benefits and financial support to Kshitij Polyline, strengthening its market position and growth prospects.

5. Market analysts’ recommendations:

Market analysts have a positive view of Kshitij Polyline, recommending a “buy” rating with a one-year target price of Rs 150 per share. This target reflects optimism about the company’s strategic initiatives, including debt reduction, capacity expansion, potential acquisitions and a rumoured partnership with Tata Group.

Application

Kshitij Polyline’s recent developments, including a successful rights issue, strategic fund allocation, potential acquisition of Omkar Specialty Chemicals, a waste management project and a rumoured partnership with Tata Group, underline its ambitious growth trajectory. The bullish target price from market analysts underscores the confidence in the company’s ability to leverage these initiatives and deliver value to shareholders in the near term. Investors looking for growth opportunities in the chemical sector could find Kshitij Polyline an attractive prospect based on its current strategic direction and analyst recommendations.

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