KN Agri Resources Limited IPO

KN Agri Resources Ltd (KNARL) was originally incorporated as Itarsi Oils and Flours Pvt. Ltd. and subsequently changed its name to the current one in October 2021. KNARL is an agro-based company primarily engaged in the business of solvent extractions, oil refining and trading of various agro commodities. Its wide range of product baskets includes processed and manufactured products that include soya meal, soya refined oil, soya crude oil, degummed oil, soya lecithin, acid oil, soya husk, cottonseed oil, refined rapeseed oil etc. Under the agro-commodity business, it trades in products like maize, gram, pulses, sugar, soyabean, wheat etc.  Company's all three plants are strategically located in Madhya Pradesh giving it an edge over other players in terms of procurement and availability of major raw materials. It has a current capacity of 375000 TPA for solvent extractions, 60000 TPA for edible oil refining and 24000 TPA for flour milling. At present, the company is marketing its products in 15 states in India and also exports to countries like the Netherlands, Singapore, Bangladesh, Nepal etc. Its refined oil is being marketed under the brand names of 'CLASSIC' and 'KHAN-PAN'. The company also has four wind energy power plants with a combined capacity of 4.60 MW. This operation is totally outsourced from third parties. As of January 31, 2022, it had 218 permanent employees on its payroll. It also employs manpower on a contractual basis as and when needed. As per financial performance, KNARL has posted total income/net profits of Rs 1292.46 Cr / Rs 21.40 Cr (FY19), Rs 853.19 Cr / Rs 13.20 Cr (FY20), Rs 1301.19 Cr / Rs 26.18 Cr (FY21) and Rs 594.67 Cr / Rs 16.83 Cr (H1 FY22). So company has shown zig-zag results. Company has posted an average EPS of Rs 11.44 and average RoNW of 14.57% for last three fiscals. Issue is priced at a P/B of 0.79 as per NAV of Rs 95.37 post issue. As per FY21 earnings on fully diluted equity post issue, asking price is at P/E of around 7.16 and as per annualised FY22 earnings P/E is 5.57. As per RHP, comparison between listed peers are shown in above table. On BRLM's front, HEM Securities Limited Private Limited associated with this SME IPO and handled 10 IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining above issue price or at par. As of now from last 10 IPOs, one are trading below and remaining are trading above issue price or at par. ( As on 22.03.22 ) As per financials, KNARL has shown zig-zag results, RoNW is 16.51% and P/E is respectively 7.16 and 5.57 as per FY21 and annualised FY22 earnings, which looks fairly priced.  Performance of BRLM is good post listing. So we are giving SUBSCRIBE rating to this IPO.

• 1 Mr. Vijay Shrishrimal
• 2 Mr. Sanjay Shrishrimal
• 3 Mr. Dhirendra Shrishrimal
• 4 K.N. Resources Private limited
• 5 Anant Trafina Private Limited
• 6 Anant Counter Trade Private Limited