Penny Stock Below Rs 30: Company Approves Rs 199.75 Crore Rights Issue To Fund Capacity Expansion And Backward Integration

On Friday, Indian equity benchmarks traded lower, with the Nifty 50 declining 154.90 points, or 0.64 per cent, to 24,013.10. Amid the broader market weakness, Sumeet Industries share price traded at Rs 25.84, down 0.12 per cent during the session.

Sumeet Industries Board Approves Rs 199.75 Crore Rights Issue

The Board of Directors approved a Rights Issue of 16.84 crore fully paid-up equity shares at a price of Rs 11.86 per share, including a face value of Rs 2 per share, aggregating to Rs 199.75 crore. The Rights Issue has been structured in the ratio of eight Rights Shares for every 25 equity shares held by eligible shareholders.

The company expects net proceeds of approximately Rs 194.90 crore, which will be deployed across working capital requirements, expansion projects, debt reduction and renewable energy initiatives.

Sumeet Industries Fund Utilisation Plans

Out of the proposed net proceeds, Rs 100 crore will be utilised towards working capital requirements to support higher production levels and raw material procurement. Another Rs 49.90 crore will be invested in operationalising assets acquired from Nakoda Limited, while Rs 23 crore has been earmarked for prepayment of borrowings. The remaining Rs 22 crore will be used to establish a 6.5 MW solar power plant, helping improve energy efficiency and reduce operating costs.

Polyester Chips Plant To Drive Backward Integration

A key component of the company's growth strategy is the operationalisation of an additional 140,000 tonnes per annum Polyester Chips (CP) manufacturing facility acquired from Nakoda Limited in Surat, Gujarat. The project involves a total investment of Rs 90 crore, with Rs 49 crore being funded through the Rights Issue and the balance through internal accruals. The facility is expected to be recommissioned in Q1 FY28 and is expected to strengthen the company's backward integration capabilities while supporting downstream polyester yarn operations.

Capacity Expansion Plans

In addition to the acquired plant, the Board has approved Phase 1 of a polyester yarn expansion project, which will add 15,000 tonnes per annum of capacity. The expansion will require an investment of Rs 30 crore and is aimed at increasing the company's presence in the value-added synthetic yarn segment. Management believes these investments will enhance operational scale, improve efficiency and support long-term growth across the polyester value chain.

Management Commentary

Commenting on the Rights Issue, Mr. Pratik R. Jaju, Managing Director of Sumeet Industries Limited, said. "The Rights Issue marks an important milestone in Sumeet Industries' growth journey and reflects our commitment to strengthening the Company's operational and financial position. We are pleased to offer our existing shareholders an opportunity to participate in the Company's future growth. The proposed fund raise of Rs 199.75 crore will support key strategic priorities, including working capital requirements, integration of acquired manufacturing assets, debt reduction, and investment in a captive solar power facility."

He further added that the operationalisation of the Polyester Chips manufacturing facility acquired from Nakoda Limited is expected to strengthen backward integration and support the company's downstream POY and FDY operations. According to management, the company expects approximately 30 per cent growth in Total Income during FY27, with EBITDA margins ranging between 5.0 per cent and 6.0 per cent. Following successful integration of the acquired assets, Total Income is expected to nearly double in FY28, while EBITDA margins could improve to 5.5 per cent to 6.5 per cent.

Sumeet Industries FY26 Financial Performance

For FY26, Sumeet Industries reported consolidated revenue of Rs 1,053.81 crore, EBITDA of Rs 60.77 crore and Profit After Tax of Rs 27.33 crore, including exceptional items.

The performance reflects continued progress in strengthening the company's integrated polyester manufacturing business while preparing for the next phase of expansion.

About Sumeet Industries

Sumeet Industries Ltd is an integrated polyester manufacturer engaged in the production of Polyester Chips, Partially Oriented Yarn (POY) and Fully Drawn Yarn (FDY). The company operates manufacturing facilities in Surat, Gujarat, and focuses on building a backward-integrated polyester value chain.

Through ongoing capacity additions, acquisitions and renewable energy investments, the company aims to enhance operational efficiency, improve margins and strengthen its position in India's polyester manufacturing industry.

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