Krishca Strapping Solutions Limited

Established in the year 2017 at Sivakasi, Tamil Nadu, Krishca Strapping Solutions Limited is engaged as the Manufacturer and Wholesaler of Strapping Tool, Strapping Seal, etc. Their products are high in demand due to their premium quality and affordable prices. Company's Chennai facility, Heat treated high tensile Steel Straps are manufactured using state-of-the-art equipment and supervised by expert metallurgists and engineers. As on date of RHP, company has installed capacity of 18,000 Mt for Steel straps and 65 Million Steel seals and current capacity utilisation is around 50.25% ( upto 15.02.23 ). As per financial performance, Krishca Strapping Solutions Limited has posted total income/net profits of Rs 0.98 Cr / Rs (2.23) Cr (FY20), Rs 9.71 Cr / Rs (0.64) Cr (FY21), Rs 18.71 Cr / Rs 1.50 Cr (FY22) and Rs 63.51 Cr / Rs 7.85 Cr (upto 10M FY23), So company has shown exceptional growth, but this much jump in sales and net profit just before IPO raises concerns. Company has posted an average EPS of Rs (-10.58) and average RoNW of 0.083% for last three fiscals. Issue is priced at a P/BV of 2.86 as per NAV of Rs 18.91/- as on 15.02.23. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 43.31 and as per annualised FY23 earnings P/E is 7.30. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Share India Capital Services Private Limited associated with this SME IPO and handled 4 SME IPOs in last 1 years. From last 4 SME IPOs, all opened above issue price or at par on the listing day. As of now from last 4 IPOs, 1 is trading below and remaining are trading above issue price or at par. ( As on 11.04.2023 ) As Per financials, Krishca Strapping Solutions Limited has shown exceptional results, RoNW is 0.94% and P/E is respectively 43.31 and 7.30 as per FY22 and annualised FY23 earnings, which looks aggressively priced as per FY22 and fairly priced as per annualized FY23, but this exceptional rise in net-profit in just before IPO raises concerns. Company is in business of strapping and which is highly competitive fragmented. Performance of BRLM is good. So we are giving NEUTRAL rating to this SME IPO.

• 1  Mr. Lenin Krishnamoorthy Balamanikandan 
• 2 Ms. Navaneethakrishnan Saraladevi