Textile penny stock below Rs 5 unveils rights issue; stock jumps over 4.50 per cent

This strategic move aims to bolster the expansion and profitability of the company.

Globe Textiles (India) Ltd., a prominent player in the textile industry, has opened an exciting investment avenue for shareholders through its Rights Entitlement (RE) issue. The initiative has already garnered strong interest, with a 37.04 per cent subscription rate within just three days, reflecting investor confidence in the company’s growth trajectory.

With an attractive rights issue price of Rs 3 per share, compared to the market price of Rs 3.84 as of January 28, 2025, the offering presents a lucrative opportunity for investors seeking exposure to a steadily growing enterprise in the textile sector.

Key Highlights of the Rights Issue

This initiative enables existing shareholders and new investors to acquire additional shares at a discounted price, reinforcing their participation in the company's long-term growth.

Investor Interest and Market Momentum
The enthusiasm surrounding the rights issue is evident from the 1.16 crore volume of Globe Textiles RE traded between January 24 and January 28, 2025. The stock’s strong market presence reflects growing investor trust in the company’s strategic vision and expansion plans.

Should you invest in Globe Textiles' Rights Issue?

• Attractive Pricing: Investors can acquire shares at Rs 3, significantly lower than the current market price of Rs 3.84.
• Strong Financial Performance: The company reported a 102.20 per cent YoY increase in net profit for Q2 FY25.
• Growth-Oriented Utilization of Funds: Proceeds will be allocated towards business expansion, working capital enhancement, and infrastructure investments.

Management Comments
Bhavik Parikh, Chairman and Managing Director of Globe Textiles, shared his insights on this strategic move. "The Company is poised for growth in the upcoming year, focusing on key investments in infrastructure, research and development, product innovation, and market expansion to sustain its progress and enhance profitability. The Rights Issue offers investors a great opportunity to increase their stake and be part of the Globe Textiles growth journey. This initiative underscores our commitment to delivering long-term value for all stakeholders while seizing opportunities for future growth."

Utilisation of Funds
Globe Textiles aims to raise Rs 45.04 crore through this rights issue, with funds strategically directed towards:

• Business Expansion – Scaling up operations and tapping into new markets.
• Working Capital Enhancement – Improving liquidity to support operational efficiency.
• R&D and Innovation – Driving new product development and sustainable practices.

The company’s recent acquisition of a 70 per cent stake in Globe Denwash, a sustainability-focused denim processing firm, has already boosted its international market presence in regions such as the UK, US, and Europe. The integration of Zero Liquid Discharge (ZLD) technology further strengthens Globe Textiles' commitment to sustainable manufacturing, a key factor in securing global partnerships.

Financial Performance
The company has showcased remarkable financial results over the past year:

• Net Profit for H1 FY25: Rs 6.52 crore (Surpassing full-year FY24’s Rs 5.75 crore).
• Q2 FY25 Net Profit Growth: 102.20 per cent YoY (Rs 3.80 crore vs. Rs 1.88 crore in Q2 FY24).

Conclusion
With a competitive rights issue price, strong financial performance, and strategic growth plans, Globe Textiles presents an attractive opportunity for both existing shareholders and new investors. The company’s commitment to innovation, sustainability, and market expansion further enhances its investment appeal.

As the subscription period remains open until February 6, 2025, investors have a well-timed opportunity to capitalize on the company’s promising future and be part of its long-term success.

Disclaimer: The article is for informational purposes only and not investment advice.