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Kritika Wires NSE SME IPO review (May apply)

Review By Dilip Davda on Sep 22, 2018

•    The company is engaged in manufacturing of wires and wire products.
•    Based on industry average parameters, issue appears fully priced.
•    KWL posted consistent growth in top lines.
•    Long term investors may consider for investment.

ABOUT COMPANY:
Kritika Wires Ltd. (KWL) has been in the business of manufacturing high quality galvanized steel wires and wire products and have been meeting the requirement of various clients in the government and private sectors like power, infrastructure, railway and many more industries. The products manufactured by the company are used for transmission and distribution of Electricity, manufacturing of concrete slippers, poles, bridges and other infrastructure facilities. It has two manufacturing units in Howrah at West Bengal.

The company is an ISO 9001: 2008 certified manufacturer and supplier of different types of galvanized and nongalvanized wires. The products are ISI marked which helps in harmonious development of standardization and quality of product. Its products are rigorously tested, in terms of surface finish, tensile strength, torsion, breaking load, zinc coating, dip and adhesion test. Apart from the product testing the Company believes IN-PROCESS testing to meet the prescribed quality standards, and also provide the test as per customer requirement.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its working capital and general corpus fund needs, KWL is coming out with a maiden IPO of 4812000 equity shares of Rs. 10 each at a fixed price of Rs. 32 per share to mobilize Rs. 15.40 cr. Issue opens for subscription on 26.09.18 and will close on 01.10.18. 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 27.11% of the post issue paid up capital of the company. Issue is solely lead managed by Hem Securities Ltd. while Link Intime India Pvt. Ltd. is the registrar to the issue. Having issued initial equity at par, it raised further equity in the price range of Rs. 40 to Rs. 100 between March 2007 and January 2017. It has also issued bonus shares in the ratio of 1 for 1 in March 2018. Average cost of acquisition of shares by the promoters is Rs. 0.00, Re. 1.00, Rs. 2.07 and Rs. 22.02 per share. Post issue, KWL’s current paid up equity capital of Rs. 12.94 cr. will stand enhanced to Rs. 17.75 cr.

FINANCIAL PERFORMANCE:
On performance front, for last four fiscals, KWL has posted turnover/net profits of Rs. 183.40 cr. / Rs. 0.43 cr. (FY15), Rs. 217.30 cr. / Rs. 1.05 cr. (FY16), Rs. 207.06 cr. / Rs. 2.67 cr. (FY17) and Rs. 257.89 cr. / Rs. 4.94 cr. (FY18). It suffered a setback in top line for FY17 but has shown improved margins. For last three fiscals it has shown average EPS of Rs. 2.76 and an average RoNW of 9.53%. Issue is priced at a P/BV of 1.06 based on its NAV of Rs. 30.14 as on 31.03.18 and at a P/BV of 1.04 based on post issue NAV of Rs. 30.65. If we consider FY18 earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 12 against industry average of 14.

COMPARE WITH LISTED PEERS:
As per offer documents, it has shown Ram Ratna and Geekay Wires at its listed peers that are currently trading at a P/Es of around 13 and 34. Thus issue appears fully priced.

MERCHANT BANKER’S TRACK RECORDS:
On merchant banker’s front, this is the 51st mandate from its stable in last six fiscals. Out of last 10 listings, 2 opened at discount and the rest with a premium ranging from 2.78% to 20% on the day of listing.


Conclusion / Investment Strategy

Consistent growth in top line augurs well. Based on its financial data, issue appears fully priced. Investors may consider investment for long term.

Review By Dilip Davda on Sep 22, 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

Kritika Wires IPO FAQs

  1. 1. Why Kritika Wires IPO?

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

  2. 2. How is Kritika Wires IPO?

    Read the Kritika Wires IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Kritika Wires IPO what should investors do?

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

  4. 4. Is Kritika Wires IPO good?

    Our recommendation for Kritika Wires IPO is to subscribe for long term.

  5. 5. Is Kritika Wires IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Kritika Wires IPO.

  6. 6. When will Kritika Wires IPO allotment status?

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

  7. 7. When will Kritika Wires IPO list?

    The Kritika Wires IPO will list on Wednesday, October 10, 2018, at NSE SME.