Review By Dilip Davda on November 13, 2018
• SKIL switched its business from tours/travels to housing society and other non related areas.
• Its top line has not even crosses Rs. 1 crore in last five fiscals.
• Bottom line has shown inconsistency and is at minuscule levels.
• Asking price is over 430 PE making it exorbitantly priced OFS.
ABOUT COMPANY:
Shree Krishna Infrastructure Ltd. (SKIL) that was originally incorporated as Shree Krishna Tours & Travels Pvt. Ltd. later on changed name and currently engaged in the business activities of marketing, development and maintenance of housing society and organic farms. Thus it changed its business strategy all together from one sphere to another with no relevance. It has also started trading in perfumed incense sticks, contract farming, project agency of navigation equipments and Maritime Consultancy, distribution of E-Vehicles, marketing arrangements for Terra Technologies and so on.
ISSUE DETAILS/CAPITAL HISTORY:
For listing benefits, SKIL is coming out with a maiden IPO of 900000 equity shares of Rs. 10 each at a fixed price of Rs. 13 per share to mobilize Rs. 1.17 crore. Entire issue is by way of offer for sale i.e. a secondary offer and no money goes to company. Issue opens for subscription on 15.11.2018 and will close on 22.11.2018. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Finshore Management Services Ltd. while Satellite Corporate Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 30% of the post issue paid up capital of the company.
Having issued initial equity at par, it raised further equity in the price range of Rs. 11.50 to Rs. 25 per share between February 2004 and August 2017. It has also issued bonus shares in the ratio of 1 for 3 in February 2013. Being OFS, company’s current paid up equity capital will remain at Rs. 3.00 crore post issue. Average cost of acquisition of shares by the promoters is Rs. 10.00 and Rs. 10.04 per share.
FINANCIAL PERFORMANCE:
On financial performance front, for last four fiscals, SKIL has posted turnover/net profits of Rs. 0.21 cr. / Rs. 0.03 cr. (FY15), Rs. 0.58 cr. / Rs. 0.03 cr. (FY16), Rs. 0.61 cr. / Rs. 0.01 cr. (FY17) and Rs. 0.77 cr. / Rs. 0.04 cr. (FY18). For Q1 of FY19 it has earned net profit of Rs. 0.02 cr. on a turnover of Rs. 0.33 cr. For last three fiscals it has posted an average EPS of Rs. 0.12 and an average RoNW of 0.84. Issue is priced at a P/BV of 1.01 based on its pre-post issue NAV of Rs. 12.83 per share. If we annualize latest earnings and attribute is on the post issue equity, then asking price is at a P/E of around 433 making it exorbitantly priced offer.
COMPARISION WITH LISTED PEERS:
As per offer documents, it has no listed peers to compare with.
LEAD MANAGER’S TRACK RECORDS:
On LM’s front, this is the 5th mandate from its stable in last two fiscals. Offer documents do not contain listing performance data of its last four listings. Based on stock exchange data out of last four listings two opened at a premium ranging from 0.05% to 0.2% and two opened at a discount ranging from 0.25% to 0.6% on the day of listings.
Based on it’s paid up equity scale; migration to main board will take longer time. Considering poor financial track record and exorbitant pricing, there is no harm in giving this issue a miss.
Review By Dilip Davda on November 13, 2018
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 Shree Krishna Infrastructure Ltd. offers an early investment opportunity in Shree Krishna Infrastructure Ltd.. A stock market investor can buy Shree Krishna Infrastructure IPO shares by applying in IPO before Shree Krishna Infrastructure Ltd. shares get listed at the stock exchanges. An investor could invest in Shree Krishna Infrastructure IPO for short term listing gain or a long term.
Read the Shree Krishna Infrastructure IPO recommendations by the leading analyst and leading stock brokers.
Shree Krishna Infrastructure IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Shree Krishna Infrastructure IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts mentioned in the above answer to "How is Shree Krishna Infrastructure IPO?"
Our recommendation for Shree Krishna Infrastructure IPO is to avoid.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Shree Krishna Infrastructure IPO.
The Shree Krishna Infrastructure IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Shree Krishna Infrastructure IPO allotment status to check.
