Kundan Edifice Limited

As per financial performance, Kundan Edifice Limited has posted total income/net profits of Rs 15.22 Cr / Rs 0.77 Cr (FY21) and Rs 32.50 Cr / Rs 1.67 Cr (FY22) and Rs 60.46 Cr / Rs 5.13 Cr (FY23), So company has shown exceptional growth, but sudden rise in bottom-line before IPO and higher issue related expenses are very surprising. Company has posted an average EPS of Rs 4.34/- and average RoNW of 60.34% for last three fiscals. Issue is priced at a P/BV of 2.80 as per NAV of Rs 32.45/- as on post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 55.71 and as per FY23 earnings P/E is 18.22. As per RHP, there are no peers. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 16 SME IPOs in last 4 years. From last 10 IPO, two opened below issue price and remaining opened at par or above issue price on the listing day. As of now from last 10 IPO, 5 are trading below issue price and remaining are trading above issue price. ( As on 11.09.23 ) As per financials, Kundan Edifice Limited has shown exceptional growth, RoNW is 63.28% and P/E is respectively 55.71 and 18.22 as per FY22 and FY23 earnings. As per FY22 earnings issue looks aggressively priced and as per FY23 earnings issue looks fairly priced. Also sudden rise in net profit and higher value of trade receivables are some red flags of this IPO. Company is in business of manufacturing, assembly, and sale of light-emitting diode ("LED") strip lights, which is highly fragmented and competitive segment. But the sector is expected to grow at good rate for next 1-3 years. Performance of BRLM is average. So based on fundamental data, we are giving NEUTRAL rating to this SME IPO and as per gray market activity one may subscribe for listing gains. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1  Divyansh Mukesh Gupta
• 2  Vijaya Mukesh Gupta