Krishna Defence and Allied Industries Limited is a company that is engaged in the development, manufacturing, and designing of Defence Application Products along with the Kitchen and Daily Dairy-based Equipment. The company started its business operation in 1997 and was initially incorporated in 1996. Krishna Defence and Allied Industries Limited have two manufacturing and production facilities located in Gujarat’s’ district of Kalol and Halol in Vadodara. In this article, we take a closer look at the Krishna Defence IPO Review and its possible future prospects.
The company has a comprehensive, diversified product portfolio as it manufactures a range of products that includes Ballast Bricks, Automatic Tyre Killer, Stainless Steel Milk Cans, Milk Cooling Tanks or Bulk Milk Coolers, Rice Storage Chute, Milking Machine, Bulk milk cooler with thermal storage system, Improvised Explosive Device Containment Vessels, Daal Cooker, Heat Recovery Unit, Cow Grooming Brush, Crowd Control Barriers, Solar Powered Milk Cooling Tanks, I-Data systems that include Automated Data Monitoring Systems which they have used in for Milk Tanks, Bulk Cooking Equipment like Rice Cauldron, Auto-CIP system Containerized Milk Procurement Unit, Ship Building Steel section, Weld Consumables, etc.
The company started a new vertical of business in 2020 that includes manufacturing and the Markets Homeland & Security products. It has been widely used in Modular Vehicle Barrier, Multi-purpose Launcher, Automatic Tyre Killer, and Long-Range LED Searchlight. These Long-Range LED Searchlights manufactured by the company have been used by some of the prestigious organizations of the country, including the Indian Armed Forces, the Police Department, and the Forest Department of the country.
The company’s whole business can be divided into four significant verticals that include Defence, Dairy, Security, and Mega Kitchen.
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the earlier outstanding loans of the company, which be availed on a consolidated basis.
- To meet the general corporate targets.
- To fund the working capital requirement along with the expenditures.
KRISHNA DEFENCE IPO DETAILS:
Krishna Defence and Allied Industries Limited, a multi-business company, recently got approval from SEBI to float their IPO in the market. Accordingly, the company has brought forward the IPO, a pure issue of the 3,048,000 new equity shares of the company that aggregates to Rs.11.89 Crores. In addition, the IPO has been brought under the SME Category; as a result, the listing will be on the NSE – SME platform.
The company stated that from the funds of the IPO, it would use Rs. 9.00 crores for the working capital while remaining will be used for the general corporate purpose. It also mentioned that the average cost at which the promoters have bought a stake in the company is Rs. 5.25 per equity share. Post-IPO offers the current paid-up equity capital of the company will be at Rs. 11.45 crores. On the Valuation of the IPO upper cap, the company will be aiming at the market cap of Rs. 44.65 crores. Check Day by Day IPO Subscription Details (Live Status)
| IPO Offer Opening Date | March 25, 2022 |
| IPO Offer Closing Date | March 29, 2022 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs. 10 per equity share |
| IPO Price | Rs. 37 – Rs. 39 per equity share |
| Market Lot | One lot of 3000 Equity Shares |
| Minimum Order Quantity | 3000 Equity Shares |
| Maximum Order Quantity | 3000 Equity Shares |
| Minimum Order Price | Rs. 117,000 |
| Maximum Order Price | Rs. 117,000 |
| Listing At | NSE – SME platform |
| Issue Size | 3,048,000 Equity Shares of the company corresponding to Rs. 11.89 Crores |
| Fresh Issue | 3,048,000 Equity Shares of the company corresponding to Rs. 11.89 Crores |
| QIB Shares Offered | 50% of the net IPO offer |
| Retail Shares Offered | 35% of the net IPO offer |
| NII (HNI) Shares Offered | 15% of the net IPO offer |
| Basis of Allotment Date | April 1, 2022 |
| Initiation of Refunds | April 4, 2022 |
| The Credit of Shares to Demat Account | April 5, 2022 |
| IPO Listing Date | April 6, 2022 |
COMPETITIVE STRENGTHS OF THE COMPANY:
- Krishna Defence and Allied Industries Limited have a very diversified offer and range of products.
- The company offers a very highly précised engineering expertise along with the technologically advanced equipment used in the kitchenware and the defense sector.
- Krishna Defence and Allied Industries Limited can carry out the process of complex manufacturing and product designing.
- The company has a powerful In-House R&D facility with a high focus on innovation and the introduction of new ideas.
- Krishna Defence and Allied Industries Limited have a very long-standing relationship with their suppliers and customers. The company has a very experienced and highly qualified technical, operations and management team.
- Some of the marquee clients of the company are as follows:
Na Ri, Garden Reach Ship Builders, Milma, DRDO, Keventers, Cochin Shipyard, Amul, Goa Shipyard, Nandini, Mazagon Dock, etc.
- The company will be highly benefited by the “Make in India,” Atmanirbhar Bharat Campaign, and PLI Scheme launched by the GoI. It will boost their manufacturing capacity and increase the market reach to the broader audience.
WEAKNESS AND THREATS:
- The company derives around 70% of the revenue from defense, while the remaining 30% is from the dairy and kitchen equipment manufacturing business.
- Krishna Defence and Allied Industries Limited’s revenue has been declining for the last 3 years, signifying that there is no such growth in the company.
- At the current Valuation, the time of the IPO offer, the P/E Ratio of the company is at 23x, which is significantly overvalued to their financial performance.
- The company has been changing its core business regularly, signifying a lack of good company vision.
- The company has been engaged in a highly fragmented and challenging business sector with many already established companies. As a result, the Krishna Defence doesn’t look like a lucrative option at current financials.
- Sustainability margins over the financial years in operational and the financial term have been a significant concern for the company.
COMPANY FINANCIALS:
| Particulars | For the year ending and the amount as in Lakhs) | ||||
| 30 September 21 | 31 March 21 | 31 March 20 | 31 March 19 | ||
| Total Assets | 5,804.14 | 5,620.06 | 6,141.36 | 6,599.65 | |
| Total Revenue | 2,098.20 | 3,618.84 | 2,572.37 | 5,890.85 | |
| Profit After Tax | 122.11 | 193.65 | 74.61 | 206.44 |
| Earnings Per Share (Rs) | 4.61 | 1.78 | 159.55 |
| CEPS (Rs) | 3.97 | 2.55 | 55.89 |
| DPS (Rs) | 0.00 | 0.00 | 0.00 |
| Book NAV/Share (Rs) | 42.92 | 38.31 | 12.03 |
| Tax Rate (%) | 26.14 | 34.24 | -23.63 |
| Core EBITDA Margin (%) | 13.67 | 15.55 | -12.08 |
| EBIT Margin (%) | 13.00 | 12.90 | 0.74 |
| Pre – Tax Margin (%) | 7.49 | 4.54 | 64.91 |
| PAT Margin (%) | 5.53 | 2.99 | 85.19 |
| Cash Profit Margin (%) | 9.52 | 8.55 | 11.23 |
| ROA (%) | 3.29 | 1.17 | 181.17 |
| ROE (%) | 11.35 | 4.75 | 139.14 |
| ROCE (%) | 10.67 | 7.64 | 39.68 |
| Asset Turnover (x) | 0.60 | 0.39 | 51.82 |
| Sales/Fixed Asset (x) | 1.91 | 1.47 | 29.79 |
| Working Capital/Sales (x) | 1.87 | 1.47 | 27.51 |
| Fixed Capital/Sales (x) | 0.52 | 0.68 | -22.95 |
| Receivable days | 132.26 | 319.75 | -58.64 |
| Inventory Days | 186.89 | 231.62 | -19.31 |
| Payable days | 195.73 | 803.87 | -75.65 |
| EV/Net Sales (x) | 0.59 | 0.75 | -21.71 |
| EV/Core EBITDA (x) | 3.48 | 4.08 | -14.85 |
| EV/EBIT (x) | 4.54 | 5.84 | -22.28 |
| EV/CE (x) | 0.37 | 0.31 | 19.90 |
| Net Sales Growth (%) | 40.15 | -57.19 | 170.20 |
| Core EBITDA Growth (%) | 28.87 | -25.97 | 211.16 |
| EBIT Growth (%) | 41.18 | -34.79 | 218.36 |
| PAT Growth (%) | 159.55 | -63.86 | 349.85 |
| EPS Growth (%) | 159.55 | -63.86 | 349.85 |
| Total Debt/Equity (x) | 1.42 | 1.60 | -11.10 |
| Current Ratio (x) | 1.81 | 1.55 | 16.34 |
| Quick Ratio (x) | 1.15 | 0.88 | 29.90 |
| Interest Cover (x) | 2.36 | 1.54 | 52.83 |
VALUATIONS:
| Debt | 23 Crores |
| Equity | 19 Crores |
| Current Ratio | 1.64 |
| Total Shares Outstanding before IPO | 84,00,000 |
| Total shares to be issued in IPO | 30,48,000 |
| Total Shares outstanding after IPO | 114,48,000 |
| PAT (FY21) | 1.93 Crores |
| P/E ratio | 23x |
| EPS | 1.70 |
COMPARISON WITH LISTED PEERS:
As per offer documents, the company has no listed peers to compare with.
PROMOTERS OF THE COMPANY:
- The promoter of the company is Mr. Ankur Ashwin Shah
| Pre – Issue Share Holding | 100% |
| Post Issue Share Holding | 73.38% |
Also Read : List of Mainboard IPO’s in India.
Also Read : List of Upcoming SME IPO’s in India.
COMPANY CONTACT INFORMATION:
Krishna Defence and Allied Industries Limited
344, Floor-3, Plot-267, A To Z Industrial Estate,
Ganapatrao Kadam Marg, Lower Parel,
Delisle Road, Mumbai, Maharashtra, 400013
Phone: +91 22 4220 3800/99
Email: cs@krishnaallied.com
Website: http://www.krishnaallied.com/
KRISHNA DEFENCE IPO REGISTRAR:
Bigshare Services Pvt Ltd
Phone: +91-22-6263 8200
Email: ipo@bigshareonline.com
Website: http://www.bigshareonline.com
KRISHNA DEFENCE IPO LEAD MANAGER(S):
