Mihika Industries plans ₹90 cr rights issue, six times market cap
The nano-cap with a market value of ₹14 crore aims to raise nearly 6.4 times that from existing shareholders. Authorized capital hiked tenfold to ₹100 crore.
What's new
- Board approved rights issue of up to ₹90 crore, over 6x the company's market cap of ₹14 crore.
- Authorized share capital raised from ₹10 crore to ₹100 crore.
- Three new independent directors appointed; two resigned.
Why this matters
A capital raise this large relative to market cap is virtually unheard of for a nano-cap with near-zero trailing revenue growth. It either signals a fundamental restructuring or a massive dilution for existing holders. The terms will decide which.
What we're watching
- Pricing and record date for the rights issue, critical for dilution math.
- Any hint of a business overhaul or acquisition to justify the capital.
- AGM on September 1 for shareholder ratification of the capital hike.
The full read
Mihika Industries, a nano-cap with a market value of just ₹14 crore, has approved a rights issue of up to ₹90 crore, more than six times its entire market cap. To make room, the board raised authorized capital from ₹10 crore to ₹100 crore, a tenfold jump. The company's trailing revenue is down 98.4% and its PAT is barely positive. The fundraising, offered to existing shareholders on a yet-to-be-fixed record date, could fund a major restructuring or wipe out current holders through dilution. Three new independent directors joined while two resigned. The open question is what Mihika plans to do with the cash and at what price it will ask shareholders to subscribe.
Questions answered
- Why is Mihika raising so much relative to its size?
- The company hasn't given a reason beyond the board approval. The ₹90 crore target is 6.4x its ₹14 crore market cap, suggesting a major shift in strategy or a large acquisition.
- How will this affect existing shareholders?
- If the rights issue is priced below the current market price, shareholders who don't participate will see dilution. The offer price and ratio will determine the impact.
- What did the board change?
- Pooja Sarkar, Shruti, and Sudhanshu Shekhar were appointed as independent directors, while Saurabh and Reema Magotra resigned.
- When is the AGM?
- The annual general meeting is scheduled for September 1.