Kaushalya Logistics Limited is providing Logistics (Carrying & Forwarding) services to major Cement Companies, mainly to Dalmia Cements (Bharat) Limited, in India. They have also worked with certain other cement companies like Ultratech Cements Private Limited in the past. However, at present approximately 60% of the total profit comes from the activity of Carrying & Forwarding Services provided to Dalmia Cements (Bharat) Limited. They do not have any long-term agreement or any exclusivity agreement with them. Kaushalya Logistics Limited is developed as an integrated Logistics and Clearing and Forwarding (C&F) services provider. At present the Company operates in three major verticals, one of which vertical is providing logistic support for handling and dealing in the cement for dealers and customers of Dalmia Cement Bharat Limited. The other vertical is of retail /e-commerce business wherein they are the sellers of Electronics and White Good items such as Televisions, Refrigerator, Washing Machines etc. on a major online e-commerce platform, covering locations all across India with registration under Goods and Services Tax (GST) in 17 Locations. They have also ventured out in commercial real estate sector by owning and renting out commercial shops in Udaipur, which constitutes the third vertical of the business operations. Company has also invested into pre-rental properties. This was to encash a good opportunity with the objective to having some regular cash inflows. Currently 18 retail shops are owned by the company in commercial project in Udaipur which give steady rental income. Company is looking to further extend its business into other verticals within Logistics like Warehousing, Transportation etc & also looking to expand its other verticals. As Company has established strong name in the cement industry and is in discussions with other cement companies and because of their strong relationship with their existing customer Dalmia Cement, it is actively exploring many more potential business opportunities in warehousing and transportation for them in addition to the new customers. As per financial performance, Kaushalya Logistics Limited has posted total income / net profits of Rs 33.28 Cr / Rs 3.00 Cr (FY21), Rs 63.59 Cr / Rs 3.76 Cr (FY22), Rs 632.16 Cr / Rs 7.05 Cr (FY23) and Rs 570.53 Cr / Rs 2.14 Cr (upto Q1 FY24). So as per previous financials data, company has shown good growth, but profit margin is very low. Company has posted an average EPS of Rs 352.21 and average RoNW of 34.36% for last three fiscals. Issue is priced at a P/BV of 0.05 as per NAV of 1432.19 as on 30.06.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 36.93, 19.69 and 16.21 respectively, which looks fully priced. As per RHP, there are no peers. On BRLM's front, Khandwala Securities Limited is associated with this SME IPO and handled 2 SME IPOs in last 1 years. From last 1 IPO, one is opened above issue price on the day of listing. As of now from last 1 IPO, one is trading above issue price. ( As on 26.12.23 ) As per financials, Kaushalya Logistics Limited has shown good growth, RoNW is 36.50% and P/E is respectively 36.93, 19.69 and 16.21 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in business of providing Logistics (Carrying & Forwarding) services to major Cement Companies, which is highly competitive and fragmented segment. 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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