Kataria Industries Limited is engaged in the manufacturing and supply of Low Relaxation Pre-stressed Concrete (LRPC) Strands and Steel Wires, Post-tensioning (PT) Anchorage System (Anchor Cone, Anchor Head and Wedges), HDPE Single Wall Corrugated (SWC) Sheathing Ducts, Couplers and Aluminium Conductors. The wide variety of products are utilized in various sectors including Infrastructure, Roads – Bridges & Flyovers, Metros, Railways, High Rise Buildings, Atomic Reactors, LNG Tanks, Power Transmission & Distribution Lines etc. The products are certified by ISO 9001:2015 for quality management systems. Company has two manufacturing plants, both are situated at Ratlam, Madhya Pradesh. The plants are well equipped with essential machinery, infrastructure, and an in-house testing facility. In the FY 20, they expanded the wire division capacity to 19,830 MT from the existing capacity of 7,830 MT. Subsequently, in the FY 22, they had further expanded capacity to 38,000 MT. In the FY 22, they commenced production of Post-tensioning Anchorage and SWC Sheathing Duct & Coupler which are used along with LRPC steel strands. The annual combined capacity of both the plants is presented here below:1. Wire Division (LRPC strands and steel wires): 38,000 metric tons (MT)2. PTS Division: 2.1 Anchor Head, Wedges and Couplers: 7,92,000 units 2.2 HDPE SWC Duct Pipe: 9,00,000 metres (MTR)3. Conductor Division: 9,000 metric tons (MT) During the last three FY 21 to FY 24, they have sold the products in Bharat and several other countries across the globe which includes Dubai, Qatar, Nepal, Iran, Oman, Bahrain and Brazil. In the year 2022-23, they have purchased a wind farm of 0.80 MW located at Karnawad (Village), Bagli (Tehsil), in Dewas, Madhya Pradesh for captive consumption of electricity at the manufacturing plant in Ratlam, Madhya Pradesh. The Company had Invested in the real estate to diversify the income streams. By investing in the real estate, Company can generate a steady income through renting spaces. Company had acquired two commercial properties in April 2023 and January 2023 situated in Surat and Vadodara, Gujarat respectively. As per financial performance, Kataria Industries Limited has posted total income / net profits of Rs 250.48 Cr / Rs 7.38 Cr (FY22), Rs 333.93 Cr / Rs 7.77 Cr (FY23), and Rs 341.48 Cr / Rs 10.02 Cr (FY24). So as per previous financials data, company has shown growth. Company has posted an average EPS of Rs 5.57 and average RoNW of 22.63% for last three fiscals. Issue is priced at a P/BV of 3.34 as per NAV of 28.71 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 28.00, 26.57 and 20.63 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. Interactive Financial Services Limited is associated with this SME IPO and handled 15 SME IPOs and 1 Main board IPO in last 3 year. From last 10 SME IPOs, three opened below issue price or at par on the day of listing and From last 1 Main board IPO, that is opened above issue price on the day of listing. As of now from last 10 SME IPOs, five are trading below issue price and remaining above issue price and From last 1 Main board IPO, that is trading below issue price. (As on 11.07.24) As per financials, Kataria Industries Limited has shown good growth, RoNW is 22.03% and P/E is respectively 28, 26.57 and 20.63 as per FY22, FY23 and FY24 earnings. So, issue looks fully priced. Company is venturing in other business segments like infrastructure, which may not go well with investors in future. Company is engaged in the manufacturing and supply of infrastructure & power related products, which is highly fragmented and competitive business segment. Performance of BRLM is average. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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