Kshitij Polyline Limited

Started in 2008, Kshitij Polyline Limited is Mumbai - Maharastra based company engaged in the business of manufacturing, marketing, sourcing of Plastic Sheet, lamination sheet, folders, I card and files having wide application in printing and stationery. Company has developed and launched more than 125 products range in File, Folder & Diary under the Brand name of "KSHITIJ", "CLASSIK" and "LC" in Indian Market. Further the company has supply – Make to order – ID card with ribbon, File & Folder with client Logo and Info, Display materials for Education, Pharma, FMCG, Finance and Insurance sectors. KPL has regular business from existing clients such as Navneet Publication, Anupam Stationery, Events and Media Organisers of conference and Exhibition. KPL has established own distribution and marketing network in Pan India Basis. Company has well established and high tech manufacturing equipments and Design facility to manufacture the various combination and size products as per the specification and design of client at Silvassa, Dadra and Nagar Haveli. Company presently have 105 employees comprising of administrative, skilled, semi- skilled and unskilled labour. As per the financial performance, KPL has posted turnover/net profits of Rs. 12.68 cr. / Rs. 0.11 cr. (FY14), Rs. 12.39 cr. / Rs. 0.16 cr. (FY15), Rs. 15.57 cr. / Rs. 0.20 cr. (FY16), Rs. 17.01 cr. / Rs. 0.28 cr. (FY17) and Rs. 27.43 cr. / Rs. 1.06 cr. (FY18). Thus it has posted gradual growth in top and bottom lines, but in FY18 there is jump in both top-line and bottom-line which raises doubts. Company has trade receivables around 30% of its total revenues. Also the margins are very low and its due to high competition of this segment. Issue is priced at a P/BV of 2.15 on the basis of its NAV of Rs. 16.26 as on 31.03.18. For last three fiscals, it has posted an average EPS of Rs. 2.13 and an average RoNW of 10.02%. 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 28 and industry average P/E is 12 as per RHP. So issue looks expensive. On BRLM's front, for Monarch Networth Capital Limited this is the 8th IPO in last three fiscals and from last 7 IPOs, one withdrawn midway due to poor response, 2 opened below issue price, 3 at par and other listed with 1% to 20% premium on the day of listing. As of now, from last 6 IPOs, 4 are trading below issue price and remaining above issue price. ( As on 18.09.18 ) As per financials, company's performance is good (sudden jump in top and bottom line for FY18 raises concerns), RoNw is 10.02% for last three fiscal and issue is highly priced as per latest earnings. Also company faces strong competition from unorganised local players and operating at very thin margins. Performance of BRLM is poor. So we give AVOID rating to this SME IPO as per current market situation.

• 1 Mr. Bharat Hemraj Gala
• 2 Mr. Hemraj Bhimshi Gala
• 3 Mrs. Rita Bharat Gala