K.P.I. Global Infrastructure Limited

Started in 2008, K.P.I. Global Infrastructure Limited is Surat - Gujarat based company engaged in solar power generation. The company provides solar power, both as an Independent Power Producer under the brand name of 'Solarism' and as a service provider to Captive Power Producer ("CPP") customers. K.P.I. Global builds, owns, operates and maintains grid-connected solar power projects as IPP. It generates revenue by entering into Power Purchase Agreements with third parties for selling power generated through its solar projects. It has entered into bilateral PPA's with reputed businesses such as Mafatlal Industries Limited, Best Paper Mills Private Limited and Meghmani Organics Limited. It also develops, transfers, operates and maintains grid-connected solar power projects for CPP customers. Both the businesses, IPP and CPP, carried out from its plant located at Bharuch, Gujarat. The Company has established a 13.25 km long 66 KV transmission line from its Plant to the Gujarat Energy Transmission Corporation Limited ("GETCO") substation located at Amod, Bharuch, Gujarat, for evacuation of the solar power generated at the Plant. As per financial performance, K.P.I. Global has posted total Income/ Net profits of Rs 27.51 cr. / Rs. 7.68 cr. (FY16), Rs 26.02 cr. / Rs. 8.12 cr. (FY17) and Rs 31.58 cr. / Rs. 11.41 cr. (FY18). For upto Q2 of FY19, company has posted net profit 3.87 cr. with total income of 18.21 cr. Company has posted consistent growth except FY17 when top-line decreased. Trade receivable are 12.99 Cr for FY18 which is around 41% of FY18 total earnings, which is very high. For FY17, it was around 4.74%. For last three fiscals, it has posted an average EPS of Rs 8.69 and an average RoNW of 28.05%. Issue is priced at a P/BV of 1.42 on the basis of post issue NAV of Rs. 56.14. If we consider latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 19 and as per FY18 earnings P/E is around 13. So issue looks fully priced as per latest earnings. As per RHP, there is no listed peers. On BRLM's front, for Vivro Financial Services Private Limited this is the 3rd IPO in last three fiscals and from last 2 IPOs, all opened above issue price with above 20% gains. As of now, one is trading below issue price and other above issue price. ( As on 31.12.18 ) Company has shown good results in last three fiscals, RoNW is 28.05% and issue looks fully priced with respect to current earnings. High value of trade receivables is a concern. Performance of BRLM is good with very limited IPOs. So we give NEUTRAL rating to this SME IPO.

• 1 Mr. Faruk G. Patel