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Shree Krishna Infra BSE SME IPO review (Avoid)

Review By Dilip Davda on Nov 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.


Conclusion / Investment Strategy

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 Nov 13, 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 prior to making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well informed investors to participate is such offers. With crazy recent listings, SME IPOs have started drawing attention of investors across the board. However, as SME issues have entry barriers and continued low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

The Shree Krishna Infrastructure IPO Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered IPO Analysts tells you if Shree Krishna Infrastructure IPO worth investing. The Shree Krishna Infrastructure IPO Note sets the IPO expectations in systematic way which tells you if Shree Krishna Infrastructure IPO good to buy (good or bad / yes or no). The IPO Forecast tells you weather to invest in Shree Krishna Infrastructure IPO by providing IPO recommendations i.e. subscribe, avoid and neutral.


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