Small-Cap Stock Under ₹50 Offers 1:4 Rights Issue at ₹26.4 Per Share
Welspun Specialty Solutions Ltd., a small-cap specialty steel manufacturer, has announced a ₹350 crore rights issue to strengthen its financial position and support future growth. The company has set March 1, 2025, as the record date, while the subscription window will be open from March 10 to March 19, 2025.
The rights issue is priced at ₹26.4 per share, offering 1 new share for every 4 shares held. This fundraising move is expected to provide liquidity and enhance the company’s expansion and operational capacity.
10 Key Highlights of Welspun Specialty Solutions Rights Issue
1. Issue Size & Amount
- Welspun Specialty Solutions will issue 13.25 crore rights equity shares.
- The total fundraise is ₹349.86 crore.
2. Issue Price & Premium
- The rights issue price is ₹26.4 per share, significantly lower than its current market price.
- This price includes a ₹20.40 premium per share.
3. Record Date for Eligibility
- March 1, 2025, is the record date to determine eligible shareholders.
4. Issue Opening & Closing Dates
- Opens: March 10, 2025 (Monday)
- Closes: March 19, 2025 (Wednesday)
5. Entitlement Ratio
- Shareholders will receive 1 new share for every 4 shares held as of the record date.
6. Impact on Share Capital
- Pre-issue shares outstanding: 53 crore shares.
- Post-issue shares (if fully subscribed): 66.26 crore shares.
7. Company Overview & Business Operations
Welspun Specialty Solutions specializes in high-grade alloy and stainless steel manufacturing.
- Uses Electric Arc Furnace (EAF) and Ladle Refining Furnace (LRF) for steel production.
- Offers continuous cast and ingot-cast products.
- Serves sectors including automotive, oil & gas, power, and defense.
8. Stock Performance
- 1-year gain: +4%, outperforming Sensex’s 2% rise.
- Recent performance: -4% decline in February, -9% in January 2025.
9. Financial Performance
- Q3 FY25 Net Loss: ₹3.60 crore (159% decline YoY).
- Net Sales: ₹194.05 crore (+11.04% YoY from ₹174.75 crore).
10. Why This Rights Issue Matters?
- Capital infusion to improve financial stability.
- Discounted pricing encourages participation.
- Potential stock dilution due to increased outstanding shares.
- Long-term growth strategy aligned with business expansion.
Should Investors Consider the Rights Issue?
Investors holding Welspun Specialty Solutions shares can subscribe at a discounted price of ₹26.4, potentially benefiting from future business expansion. However, the company’s net loss and recent stock decline raise concerns about its short-term financial health.
For long-term investors, the increased capital base could drive business growth and stability, making it a potential opportunity for value investment in the specialty steel sector.
