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Kapston Facilities NSE SME IPO review (Apply)

Review By Dilip Davda on Mar 18, 2018

Kapston Facilities Management Ltd. (KFML) is in the business of providing private security and facility management services in India. It has emerged as the leading service provider in Telangana and Andhra Pradesh. KFML is an ISO 9001:2008 and OHSAS 18001:2007 certified company for providing integrated facility management services for security, housekeeping, M&E( Electro Mechanical) and Landscaping (Horticulture) and allied services. It is a MSAME certified with PSARA license and is a member of esteemed organizations such as APSA, SCSC, IISSM, CAPSI, SSSDC and FTAPCCI etc. Presently it has around 6394 employees and has over 12 branches in 10 cities of 8 states.

To part finance its repayment of loans, working capital and general corpus fund needs, KFML is coming out with a maiden IPO of 2304000 equity shares of Rs. 10 each (comprising fresh equity issue of 1152000 shares and offer for sale (OFS) of equal size) at a fixed price of Rs. 92 per share to mobilize Rs. 21.20 crore. Issue opens for subscription on 21.03.18 and will close on 23.03.18. Minimum application is to be made for 1200 shares and in multiples thereon, thereafter. Post issue, shares will be listed on NSE SME Emerge. Issue is solely lead managed by CKP Financial Services Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.50% of the post issue paid up capital of the company. Having initial equity issued at par, it raised further  equity at a price of Rs. 80 per share and has issued bonus shares in the ratio of 49 for 1 (March 2014), 3 for 2 (December 2016), 1 for 5 (August 2017) and 3.5 for 1 (February 2018). Average cost of acquisition of shares by the promoters is Rs. 0.70 per share. Post issue, its current paid up equity capital of Rs. 7.54 cr. will stand enhanced to Rs. 8.69 cr.

On performance front, KFML has posted revenue/net profit of Rs. 41.52 cr. / Rs. 1.45 cr. (FY14), Rs. 58.91 cr. / Rs. 1.99 cr. (FY15), Rs. 74.99 cr. / Rs. 2.16 cr. (FY16) and Rs. 93.88 cr. / Rs. 3.06 cr. (FY17). For first nine months of the current fiscal, it has earned net profit of Rs. 4.38 cr. on revenue of Rs. 84.88 cr. Thus it has shown consistent growth in top and bottom lines.  For last three fiscals, it has posted an average EPS of Rs. 3.58 and an average RoNW of 31.53%. Issue is priced at a P/BV of 4.68 on the basis of its NAV of Rs. 19.64 as on 31.12.17 and at a P/BV of 3.15 on the basis of post issue NAV of Rs. 29.22. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 14 against industry average of 96. It has shown listed peers Quess Corp and SIS that are currently trading at a P/E of around 59 and 197 respectively (as on 16.03.18). Thus it is priced very attractively.

On merchant banker’s front, this is the first mandate from its stable and has no track record.


Conclusion / Investment Strategy

Issue is attractively priced and has good performance track record. Investment may be considered for short to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Mar 18, 2018

Review Author

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. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. 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 own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

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.

Email: dilip_davda@rediffmail.com

Kapston Facilities Management IPO FAQs

  1. 1. Why Kapston Facilities Management IPO?

    The initial public offer (IPO) of Kapston Facilities Management Ltd offers an early investment opportunity in Kapston Facilities Management Ltd. A stock market investor can buy Kapston Facilities Management IPO shares by applying in IPO before Kapston Facilities Management Ltd shares get listed at the stock exchanges. An investor could invest in Kapston Facilities Management IPO for short term listing gain or a long term.

  2. 2. How is Kapston Facilities Management IPO?

    Read the Kapston Facilities Management IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Kapston Facilities Management IPO what should investors do?

    Kapston Facilities Management IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Kapston Facilities Management IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Kapston Facilities Management IPO good?

    Our recommendation for Kapston Facilities Management IPO is to subscribe.

  5. 5. Is Kapston Facilities Management IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Kapston Facilities Management IPO.

  6. 6. When will Kapston Facilities Management IPO allotment status?

    The Kapston Facilities Management IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Kapston Facilities Management IPO allotment status to check.

  7. 7. When will Kapston Facilities Management IPO list?

    The Kapston Facilities Management IPO will list on Wednesday, April 4, 2018, at NSE SME.