Textile Stock Approves Allotment of 5 Cr Compulsorily Convertible Equity Warrants of Rs 38.25 Cr

Shares of Vishal Fabrics Ltd surged by approximately 2.5% to Rs 33.60 per share from the previous close of Rs 33.23, reflecting growing investor interest. The company's market capitalization now stands at over Rs 664 crore. The share price jump followed a significant announcement by the company regarding fundraising efforts.

On Tuesday, the Board of Directors, through its Fund Raising Committee, approved the allotment of 5 crore Compulsorily Convertible Equity Warrants ("Warrants"). These Warrants grant the holders the right to subscribe to one equity share with a face value of Rs 5 per Warrant. The issue price for these Warrants is Rs 30.60, determined according to the provisions of Chapter V of SEBI's ICDR Regulations. The recipients of the Warrants belong to the "Non-Promoter, Public Category" and are being issued the Warrants on a preferential basis. The company has already received 25% of the issue price as the subscription amount, aggregating Rs 38.25 crore.

The allotment news comes after a strong quarterly financial performance from Vishal Fabrics. In July 2024, the company reported standalone net sales of Rs 339.92 crore for the quarter ending June 2024, up 3.57% from Rs 328.20 crore in the same quarter last year. More significantly, the company recorded a net profit of Rs 4.78 crore for June 2024, a remarkable 106.1% increase compared to Rs 2.32 crore in June 2023. Additionally, EBITDA rose by 28.26% to Rs 26.69 crore from Rs 20.81 crore in June 2023. The company's earnings per share (EPS) also improved to Rs 0.24 from Rs 0.12 in the same period last year.

In addition to the issuance of Warrants, the Board has also approved raising up to Rs 100 crore through a Qualified Institutions Placement (QIP) of equity shares with a face value of Rs 5 each. This move is expected to further bolster the company's financial position and support its growth initiatives. However, the QIP will be subject to shareholder and regulatory approvals.

Following the preferential issue and assuming full conversion of the Warrants, the shareholding structure of Vishal Fabrics is poised to undergo significant changes. Before the preferential issue, the promoters held 69% of the company's shares, with the remaining 31% held by the public. After the Warrants are fully converted, promoter shareholding will reduce to 55.07%, while public shareholding will increase to 44.93%, marking a shift in the company's ownership composition.

Established in 1985, Vishal Fabrics Ltd is part of the Ahmedabad-based Chiripal Group and is recognized for its expertise in manufacturing and distributing a wide range of fabrics. The company specializes in dyeing, printing, and processing various textiles, including denim. Known for their innovative approach, Vishal Fabrics offers a diverse portfolio of fabrics, including 100% cotton, cotton blends, and modal. They are a leading supplier of stretch denim and cater to a wide array of clients, including well-known international fashion brands.