Sri Krishna Metcom Limited

Started in 2008, Sri Krishna Metcom Ltd is engaged in the business of processing of non-basmati and basmati rice in India. They also sells rice bran, a by-product of rice to oil manufacturers. The company offers its products to various wholesalers and retailers under the BABA, PANCHAKANYA, SINGHAM, and MIDDU BHAI brands. They are the one of the largest processors of non-basmati rice with a milling capacity of 350 Metric tons per day in the State of Jharkhand. They process varieties of rice with the help of state of the art plant and machinery of International Standards i.e. Automatic Ultra Modern State of Art Buhler's Swiss Technology Rice Mill. On performance front, SKML has posted turnover/net profits of Rs. 24.22 cr. / Rs. – (1.60) cr. (FY14), Rs. 79.03 cr. / Rs. 0.88 cr. (FY15), Rs. 81.04 cr. / Rs. 0.86 cr. (FY16) and Rs. 82.11 cr. / Rs. 1.03 cr. (FY17). Last three fiscal’s top line and bottom line is almost stagnant. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 70 plus (against Industry’s composite P/E of 40). Last three year’s average EPS is 0.75 and average RoNW is 7.18. Issue is priced at a P/BV of 5 plus. Thus IPO is priced aggressively. On merchant banker’s front, it has no track record. This is the first mandate from its stable. As per financials, company's growth is almost stagnant, RoNW is 7.18% for last three fiscals and issue is highly priced. So we give AVOID rating to this SME IPO.

• 1 Mr. Sudhir Prasad Sahu
• 2 Mr. Yogesh Kumar Sahu
• 3 Mr. Gyan Prakash Sahu
• 4 Sudhir Prasad Sahu (HUF)