G.K.P Printing & Packaging Limited

Started in April 2018, G. K. P. Printing & Packaging Limited (GKPL) is Mumbai, Maharashtra based company engaged in the business of the manufacturing of corrugated boxes. GKPL is also engaged in the trading of Kraft paper, Duplex paper and Low - Density Plastic Rolls (LD Rolls). The revenue of the company for the period ending December 2018 came from manufacturing (63.08%) and trading (36.17%). Top 2 customers of the company (Shri Shyam Packaging and Spectra International Ltd) contributes 72% of the revenue. Company manufacture corrugated boxes such as master cartons, mono cartons, Honeycomb partition boxes, Die cut self-locking boxes, storage bins, adjustable depth book flap, Ring flap boxes, and unit cartons. Kraft paper and Duplex papers are the primary raw material in corrugated boxes manufacturing. Company has its manufacturing unit at Palghar near Mumbai. Company has also set up a new manufacturing facility which is located at Vapi, Gujarat. Company has combined manufacturing capacity of 7200 MT. Company has 10 employees and 20 skilled and semi-skilled labor. On the financial performance front, GKP Printing has posted turnover/net profits of Rs. 5.13 cr. / Rs. 0.25 cr. (FY16), Rs. Rs. 5.75  cr. / Rs. 0.24 cr. (FY17), Rs. 14.08 cr. / Rs. 0.54 cr. (FY18).  For the upto Q3 of FY19, it has earned a net profit of Rs. 2.76 cr. on a turnover of Rs. 19.23 cr. The sudden jump in top-line is due to merging of business of three different entities into one Limited company.  As company was formed in April 2018, so we don't have average EPS and RoNW. The issue is priced at a P/BV of 1.83 on the basis of its NAV of Rs. 17.46 as on 31.12.18 and at a P/BV of 1.41 on the basis of post issue NAV of Rs 22.62 post issue. If we annualise latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 6.39 thus issue appears very reasonably priced, but if company may repeat same performance in future that is need to be watched. Comparison with listed peers is given in above table. On BRLM's front, for Holani Consultants Private Limited this is the 3rd SME IPO. From last 2 IPOs, 1 opened at par, 1 above issue price with listing gains around 49%. Currently from last 2 IPOs, all are trading below issue price. ( As on 22.04.19 ) Results of company is impressive, RoNW is 42.48% and issue looks very reasonably priced with respect to current earnings with P/E of 6.39. Performance of BRLM is poor. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Keval Harshad Goradia
• 2 Mrs. Payal Keval Goradia