Started in 2004, Kritika Wires Limited is Kolkata based company of "Jai Hanuman Group" and is engaged in manufacturing of all types of Steel Wire and Galvanised Wire that ultimately cater to the needs of the State Electricity Boards, Power Grid Corporation of India Ltd, etc. The products manufactured by our Company are used for transmission and distribution of Electricity, manufacturing of concrete slippers, poles, bridges and other infrastructure facilities. In the year 2005, company started commercial production of wire drawing of high carbon, low carbon and alloy steel. The company in course of further expansion in the year 2010 started various types of wire processing and manufacturing like galvanising, stranding and barbed - steel wires. The manufacturing facilities are situated at the two units located at Dhulagarh Industrial Park, Kolkata, West Bengal. Company has total installed capacity of 66,200 MT and current capacity utilisation is around 63%. So there is good possibility of growth without further capacity expansion for at least next 2-3 years. The products are widely being used by electrical contractors, corporate engaged in turnkey business of creating infrastructure for power transmission & distribution, cable & conductor manufacturing, general engineering purpose, textile industry, Housing and Infrastructure development industry and railways etc. KWL is approved vendor of POWERGRID and also of most of the state owned electricity boards. Apart from the state owned electricity boards, some of the customers are Bajaj Electricals Limited, Cabcon, Godrej, KEC, Apart Industries Limited, Voltas, L&T, etc. As on March 31, 2018, company has employed total 285 full-time employees. As per the financial performance, KWL has posted turnover/net profits of Rs. 149.11 cr. / Rs. 1.01 cr. (FY14), Rs. 183.40 cr. / Rs. 0.43 cr. (FY15), Rs. 217.30 cr. / Rs. 1.05 cr. (FY16), Rs. 207.05 cr. / Rs. 2.67 cr. (FY17) and Rs. 257.89 cr. / Rs. 4.94 cr. (FY18). Company has show consistent growth over the years except FY17, when there is decline in top-line. But increase in bottom line in last two years very high and its almost 5 times of FY16 earnings with increase in top-line around 20% since FY16. Trade receivables are above 25% of total revenue in last three fiscals. As per company average credit period for customers is 90 to 120 days. So company will require additional capital to increase top line. Issue is priced at a P/BV of 1.04 on the basis of its NAV of Rs. 30.65 post issue. For last three fiscals, it has posted an average EPS of Rs. 2.76 and an average RoNW of 9.53%. If we take into account latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 11.5 and as per RHP industry average P/E is 14.07. So issue looks reasonably priced. On BRLM's front, for Hem Securities Limited this is the 33nd IPO in last three fiscals and from last 10 IPOs, two opened below issue price and other listed with 1% to 20% premium on the day of listing. As of now, from last 10 IPOs, 6 are trading below issue price and remaining above issue price. ( As on 21.09.18 ) As per financials, company's performance is good, RoNw is 9.53% for last three fiscal and issue is reasonably priced as per latest earnings. With focus of GoI on infrastructure and power distribution, demand will be robust for this industry. If company can maintain same PAT margin in future also or not, that need to be watched. Performance of BRLM is poor after listing. So we give NEUTRAL rating to this SME IPO as per current market situation.
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