Review By on June 24, 2016
KKV Agro Power Ltd (KKV) is engaged in the business of power generation from renewable energy sources, wind and solar. As on December 31, 2015, KKV’s total portfolio of operating projects included 7 MW of aggregate installed capacity, which comprised of 6.0 MW of wind energy projects and 1.0 MW of solar project. The company is currently in the process of acquiring additional capacity of 0.8 MW of wind energy generators in Tamil Nadu. It operates under “Group Captive Power Scheme” notified under the Electricity Act, 2003 by Ministry of Power, Government of India.
To part finance setting up 0.8 MW Wind Energy Project in TN, Erection of 33 KV Electricity Transmission Line, repayment of Term Loan and raise general corpus fund, the company is coming out with a maiden iPO of 112000 equity share of Rs. 10 each at a fixed price of Rs. 320 per share to mobilize Rs. 3.58 crore. Issue opens for subscription on 30.06.16 and will close on 07.07.16. Minimum application is to be made for 400 shares and in multiples thereon, thereafter. Issue is lead managed by Karvy Investor Services Ltd and SKDC Consultants Ltd is the registrar to the issue. Post allotment, shares will be listed on NSE SME Emerge. After initial contribution at par, it issued fresh equity at a price of Rs. 320 in May 2016. Its current paid up equity capital of Rs. 0.25 crore will stand enhanced to Rs. 0.36 crore post IPO.
On performance front, the company generated revenues of Rs. 1.90 crore, Rs. 2.62 crore and Rs. 3.58 crore in FY13, FY14 and FY 15 respectively with net profits of Rs. 0.37 crore, Rs. 0.64 crore and Rs. 0.46 crore. It has sold 5.4 MU, 4.8 MU and 6.2 MU in FY2013, FY2014 and FY2015 respectively. For nine months ended 31.12.15 it has earned net profit of Rs. 0.56 crore on revenue of Rs. 4.16 crore. If we annualize these earnings and attribute on expanded equity post IPO then the asking price is at a P/E of 15 plus against peers P/E of around 9. Thus it appears to have been priced on the higher side.
On merchant banker’s front, this is the first mandate from its stable and has no track record for SME IPOs. However, it did an issue on main board in2015 that has not done well.
Conclusion: As the renewable energy sector is heading for big prospects going forward, risk aver investors with cash surplus may consider long term investment.
Review By on June 24, 2016
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
The initial public offer (IPO) of KKV Agro Powers Ltd. offers an early investment opportunity in KKV Agro Powers Ltd.. A stock market investor can buy KKV Agro Powers IPO shares by applying in IPO before KKV Agro Powers Ltd. shares get listed at the stock exchanges. An investor could invest in KKV Agro Powers IPO for short term listing gain or a long term.
Read the KKV Agro Powers IPO recommendations by the leading analyst and leading stock brokers.
KKV Agro Powers IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the KKV Agro Powers IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is KKV Agro Powers IPO?"
Our recommendation for KKV Agro Powers IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the KKV Agro Powers IPO.
The KKV Agro Powers IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit KKV Agro Powers IPO allotment status to check.
