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Review By Dilip Davda on September 18, 2018
• KPL manufacturing office stationery and other plastic products.
• Financial performance is not encouraging.
• Sudden jump in top and bottom line for FY18 surprising.
• Issue is priced very aggressively.
ABOUT COMPANY:
Kshitij Polyline Ltd. (KPL) incorporated with an aim of running manufacturing, marketing, sourcing of Plastic Sheet, lamination sheet, folders, I card and files having wide application in printing and stationery. Company & its executives have developed the skill and expertise in designing and innovation in office stationery, calendar, dairy and student study materials of different variety colours, design and application. It has also developed the In house technical & Design team to provide stationery solution and implementation for calendar, diary, books as replacement of traditional material with new and innovative PP material. KPL has an aim to develop its Brand for quality products for Office stationery, Publicity material, ID card & smart card, File & folders & wiro books and developed the technique to make all products as ? Make in India? and provide competition to China and other Markets.
The company 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. With its own network, company has developed the reputation and goodwill for timely supply of material to their reputed clients. It has plan to develop logistic & warehousing facility in Delhi, Jaipur, Culcutta, Hydrabad, Banglore, Chennai and Pune. This shall also support for E commerce and Online marketing of company‘s products.
ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans to purchase machinery and equipments to manufacture Laminated sheets, Wiro and PP Sheet suitable for stationery and office products, working capital and general corpus fund needs, KPL is coming out with a maiden IPO of 2500000 equity shares of Rs. 10 each at a fixed price of Rs. 35 per share to mobilize Rs. 8.75 cr. Issue opens for subscription on 21.09.18 and will close on 27.09.18. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 28.79% of the post issue paid up capital of the company. Issue is solely lead managed by Monarch Networth Capital Ltd. and Karvy Computershare Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised/converted further equity in the price range of Rs. 15 and Rs. 20 between November 2016 and March 2018. It has also issued bonus shares in the ratio of 1 for 6 in May 2018. Average cost of acquisition of shares by the promoters is Rs. 10.70, Rs. 11.28 and Rs. 12.11 per share. Post issue KPL’s current paid up equity capital of Rs. 6.18 cr. will stand enhanced to Rs. 8.68 cr.
FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, KPL has posted turnover/net profits of 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). Sudden jump in top and bottom line for FY18 is a bit surprising. For last three fiscals, it has posted an average EPS of Rs. 2.13 and an average RoNW of 10.02%. 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. If we consider FY18 earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 29 making it aggressively priced issue.
COMPARE WITH LISTED PEERS:
As per offer documents, it has shown Ecoplast, Duropack, Xpro India, Cosmo Films as its listed peers that are currently trading at a P/Es of around 14, 10, 00 and 6 (as on 18.09.18). All these are strictly not comparable with KPL.
MERCHANT BANKER’S TRACK RECORD:
On merchant banker’s front, this is 12th mandate from its stable in last five fiscals. Out of last 10 listings 2 opened at discount, 3 at par and the rest with a premium ranging from 1.43% to 45%.
Company’s track record is average. Issue is aggressively priced. It has stiff competition from unorganized sector. Cash surplus risk savvy investors may consider investment at their own risk.
Review By Dilip Davda on September 18, 2018
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Kshitij Polyline Limited offers an early investment opportunity in Kshitij Polyline Limited. A stock market investor can buy Kshitij Polyline IPO shares by applying in IPO before Kshitij Polyline Limited shares get listed at the stock exchanges. An investor could invest in Kshitij Polyline IPO for short term listing gain or a long term.
Read the Kshitij Polyline IPO recommendations by the leading analyst and leading stock brokers.
Kshitij Polyline IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Kshitij Polyline IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Kshitij Polyline IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Kshitij Polyline IPO.
The Kshitij Polyline IPO allotment status will be available on or around October 3, 2018. The allotted shares will be credited in demat account by October 5, 2018. Visit Kshitij Polyline IPO allotment status to check.
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