Shri Krishna Prasadam Ltd IPO Review (Avoid)

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Review By Dilip Davda on Mar 11, 2014

SKPL is was originally engaged in the business of manufacturing, exporting and supplying gemstones, stone jewelry, rudraksha beads, Shivlings, Shri Yantras, Sphatic Ganesha, Rudraksh Pendant, Rudraksh Mala etc. Due to hike in Gold import duly leading to sluggish trends in business, the company mulls to diversify in the business of real estate, consultancy services and agricultural activities. To finance this and raise long term working capital, the company is issuing 2160000 equity share of Rs. 10 each at par. Issue is lead managed by Sobhagya Capital Options Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Post allotment shares will be listed on BSE SME. 

On performance front, for the fiscal 2011-12 and 2012-13 the company posted an EPS of Rs. 0.03 and 0.01 respectively. For the first 10 months of current fiscal ended on 31.01.14 it has earned net profit of Rs. 0.03 crore on a turnover of Rs. 1.69 crore. 

After initial allotment of 10000 shares at par, the company issued 1343595 equity shares at a price of Rs. 20.50 between 12.12.2013 to 29.01.14 and on 31.01.14 it issued bonus shares in the ratio of 1 for 1 to take the paid up equity to Rs. 2.71 crore that will rise to Rs. 4.87 crore post this issue. If we attribute current earning on annualized basis on enhanced equity post this IPO, then EPS stands at Rs. 0.01 translating in asking price at par at a P/E of 1000. Minimum application is to be made for 10000 shares and in multiples thereof, thereafter. As no company can issue shares below par value, investors might get tempted for this offer, but considering fundamentals, it looks pricy even at par. 

Merchant banker has poor track record for past mandate. 

Conclusion / Investment Strategy

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 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

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