KP Green Engineering Limited is a part of Gujarat based KP Group, promoted and founded by Dr. Farukbhai Gulambhai Patel. Operating since 1994, KP Group has completed more than 25 years of its successful operations. KP Group consists of more than 30 companies across India, all playing vital role in the robust growth of the organization. KP Group has achieved its growth through diversification into various sectors including fabrication and galvanizing, renewable energy sector (Solar & Wind), Telecom Infrastructure (Telecom Towers and OFC Network set up) and Green Hydrogen and Ammonia showcasing its commitment to sustainable and innovative solutions. Started in 2001, the company manufactures fabricated and hot-dip galvanized steel products. The diverse range of products includes Lattice Towers Structures, Substation Structures, Solar Module Mounting Structures, Cable trays, Earthing strips, Beam Crash Barriers and other infrastructure solution products. They provide in-house fabrication and Hot Dip Galvanizing facilities enabling tailor made solutions to the clients and end-to-end solutions by carrying out engineering, designing, fabrication, galvanization, and deployment. The company is an accredited vendor with GETCO (Gujarat Energy Transmission Corporation Limited) and MSETCL (Maharashtra State Electricity Transmission Company) for upto 400 Kw and 220 Kw, respectively. The company operates through the manufacturing facility located at Dabhasa, Vadodara – 391440, Gujarat, spread across an area of 200,000 sq. ft., fully equipped with CNC machinery and equipment with installed capacity of 53,000 MT and current capacity utilization for FY21, FY22 and FY23 is respectively 63.05%, 64.21% and 74.28%. They are ISO 9001:2015 certified company. They have in-house, well equipped quality control laboratory (for pre and post-production quality checks) to meet the demanding needs of the diversified customers. Apart from above they also provide Fault Rectification Services (FRT) w.r.t. Optical Fiber Cables to various telecom operators, Job work for galvanizing and Solar Installation services as part of the service portfolio. The company is further planning to expand into the existing line of business along with addition of new products to the portfolio at the new manufacturing plant proposed to be set up at Matar, Bharuch. The new facility will have a capacity of more than 2,90,000 MT, a substantial increase from the current capacity of 53,000 MT at the existing plant. In addition to the product offerings, the company is planning to introduce new line of products including High Masts, Floor Gratings, Pre-Engineered Buildings and Heavy Fabrications to meet evolving market demands. As per financial performance, KP Green Engineering Limited has posted total income / net profits of Rs 38.84 Cr / Rs 1.58 Cr (FY21), Rs 78.42 Cr / Rs 4.54 Cr (FY22), Rs 114.79 Cr / Rs 12.40 Cr (FY23) and Rs 104.14 Cr / Rs 11.27 Cr (upto Q2 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Company has posted an average EPS of Rs 2.23 and average RoNW of 27.89% for last three fiscals. Issue is priced at a P/BV of 11.69 as per NAV of 12.32 as on 30.09.2023. 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 158.42, 58.09 and 31.95 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Beeline Capital Advisors Private Limited is associated with this SME IPO and handled 30 SME IPOs in last 2 year. From last 14 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 14 SME IPOs, three are trading below issue price and remaining trading above or at par issue price. ( As on 09.03.24 ) As per financials, KP Green Engineering Limited has shown good results, RoNW is 37.68% and P/E is respectively 158.42, 58.09 and 31.95 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced and sudden rise in net-profit is very surprising. Company is in business of manufacturing fabricated and hot-dip galvanized steel products. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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