What is the Shivam Autotech rights issue?

Shivam Autotech is offering existing shareholders 19 new shares for every 25 held at ₹12 a share, raising ₹119.9 Cr. The issue opened on 28 October and closes on 19 November 2026; rights entitlements can be sold on the exchange until 13 November.

How will Shivam Autotech use the rights issue money?

₹75 Cr is the promoter's existing unsecured loan converted into shares, so no new cash comes in for that part. About ₹32 Cr of fresh cash goes to long-term working capital, mainly to buy steel.

What happens if a Shivam Autotech shareholder does not subscribe?

The share count rises by 76%, so a shareholder who skips the issue sees their stake shrink by about 43%. They can instead sell their rights entitlement on the exchange before 13 November to recover some value.

Is Shivam Autotech financially healthy?

No. It has posted losses for three years (₹81 Cr in FY26), has a negative net worth, carries about ₹418 Cr of borrowings, and depends on one customer for about half its sales. September quarter revenue rose 18%, which is an early positive but not yet a turnaround.

Shivam Autotech Rights Issue at ₹12: What a Rights Issue Is, and Why This One Is Mostly a Loan Swap

A rights issue in name, a promoter loan swap in substance.

What is a rights issue?

A rights issue is when a listed company sells new shares only to its existing shareholders, usually below the market price. Each shareholder gets a right to buy new shares in proportion to what they already hold. They can use that right, sell it on the exchange (the "rights entitlement"), or let it lapse.

Shivam Autotech's issue

Item	Detail
Issue size	₹119.9 Cr (9.99 Cr new shares)
Rights price	₹12 a share (face value ₹2)
Market price	about ₹13.8 (11 Nov 2026 close)
Ratio	19 new shares for every 25 held
Record date	15 October 2026
Opens / closes	28 October / 19 November 2026
Last day to sell rights entitlements on the exchange	13 November 2026
Proposed listing of new shares	25 November 2026

Where the money goes

Use	₹ Cr
Promoter's unsecured loan converted into shares (no new cash)	75
Long-term working capital (mainly buying steel)	32

So of the ₹120 Cr, ₹75 Cr is not new money. The promoter, Dayanand Munjal Investments, already lent it to the company and is swapping that loan for shares. Only about ₹32 Cr of fresh cash comes in to run the business.

What it means for existing shareholders

The share count rises by 76% (19 new shares for every 25). A shareholder who skips the issue ends up with 25 out of every 44 shares, about 57% of their earlier stake. That is a cut of about 43%.

A shareholder who subscribes keeps their stake, but puts more money into a business that is losing money.

Adding cheaper shares pulls the price toward a blended level: (25 × ₹13.8 + 19 × ₹12) ÷ 44, or about ₹13. So the discount to the market price is smaller than it first looks.

The business

Shivam Autotech is a Munjal family (Hero group) company that makes forged auto transmission parts: gears, shafts, and starter motor and steering components for two-wheelers, cars and commercial vehicles.

₹ Cr	FY24	FY25	FY26
Revenue	470	454	410
Net profit	(50)	(48)	(81)

Losses three years running, widening to ₹81 Cr in FY26.
Negative net worth of about ₹75.5 Cr (September 2026). The auditor flagged the negative net worth and current liabilities exceeding current assets.
₹418 Cr of borrowings, with finance costs of about ₹21 Cr in the September quarter alone.
One customer makes up about half of sales (48.9% in FY26); the top 10 make up 88%.
Plants run at 41% to 62% of capacity.

The one positive: September quarter revenue rose 18% year on year to ₹133.6 Cr, and the loss narrowed from the June quarter.

Verdict

A rights issue that mainly cleans up the promoter's loan, with a small cash top-up. For shareholders, it is a choice between putting more money into a struggling business or accepting heavy dilution. For anyone else, there is no reason to buy in for this.

Educational purposes only. Not investment advice. DYOR.

Sources: Autocar Pro, rights issue filing; Autocar Pro, Q2 FY27 results; Screener; Arthneeti, corrigendum.