Ami plans Preferential issue of equity, just 15 months after raising Rs.200 crores in their IPO.
In the last concall, management said Capex for the current year and the next will be Rs.100 crore each, which will be mostly funded from internal accruals and debt. But the problem with the company is their working capital always looked stretched, with CFO just half of PAT in FY21 and negative in FY22. Working Capital Days have increased continuously for last six years (based on screener data), from 46 days in FY17 to 141 days in FY22.
Such an operating cycle becomes a constraint for growth, as new business opportunities cannot be taken up without raising fresh debt or equity dilution. Raising fresh equity now (presumably from external financial investors) would lead to lowering of promoter stake, which is already quite low at 39 %. Overall, not a great picture unless the company has really hit upon some gold mine in the last few months which justifies such an action as a one-time measure. We need to wait and see.
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