Shree Krishna Infrastructure IPO Review

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Shree Krishna Infrastructure Basic Details

 

Shree Krishna Infrastructure Background

When the company was originally founded as Shree Krishna Tour and Travels Private in the state of Gujarat on July 03, 1990, it began its operations as transport as well as tours and travelling agent.

In the year 1995, it got engaged in activities of marketing, development and maintenance of Housing Society and organic farms and providing leases of land for agriculture of crops, etc.

Now, the company is involved in other activities like trading of perfumed incense sticks, contract farming and sales and marketing of products and services of Marine Navaids And Solar Auto Private Limited, which is engaged in the production of Aids to Navigation Equipment and providing Maritime consultancy for aids to navigation.

Other business activities of the company include Distribution Project of E-Vehicles as a part of which, ‘Marine Navaids And Solar Auto Private’ has agreed to designate the company as “Exclusive Distributor” for Gujarat for a period of 10 years.

Also, the company is engaged in Marketing of Terra Technologies, i.e. valuable and proprietary natural resource exploration technologies as well as providing exploratory services (Terra Services).

The business is coming up with a small SME IPO and looking to get retail shareholding in the next few days. In this detailed review, we will talk about different aspects related to this IPO and see whether you should be investing in it or not.

Shree Krishna Infrastructure IPO Data Points

IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of 9 lakh Equity shares and the face value of each share will be ₹10. The fixed price has been set at ₹13 per share. The offer price includes a premium of ₹3 and is 1.3 times the face value of the equity shares.

The IPO valuation is expected to be up to ₹117 lakhs or ₹1.17 Crore.

Shree Krishna Infrastructure IPO includes an offer for sale of:

• Up to 5,45,819 equity shares by Mr Ravi Rajiv Kotia and
• Up to 3,54,181 equity shares by Mr Amit Rameshbhai Kotia;

of which 50,000 equity shares aggregating up to ₹6.5 lakhs will be reserved for subscription by the market makers to the offer and the rest 8.5 lakh equity shares, aggregating up to ₹110.5 lakhs will be issued to the public.

Out of these 8.5 lakh shares, 4.3 lakh equity shares, aggregating up to ₹55.9 lakhs will be allocated to retail investors of up to ₹2 lakh and 4.2 lakh shares, aggregating to ₹54.6 lakhs will be available for allocation to other investors of above ₹2 lakhs.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the SME exchange of the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on June 21, 2018, the fresh issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on July 14, 2018, the offer has been approved by them.

Shree Krishna Infrastructure Financial Performance

The financial position of the company is quite good as it has been showing a consistent rise in total revenues, total assets as well as profit after tax for the last 5 financial years.

 

Profit after tax has been increased by 138.38% from ₹1.48 lakhs in Financial Year ended March 31, 2017, to ₹3.53 Lakhs in the financial year ended March 31, 2018.

The return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is 0.92%, 0.57% and 1.12% respectively.

Shree Krishna Infrastructure IPO Objectives

The main objective of the IPO is to carry out the sale of 9 lakh equity shares by the selling shareholders.

The proceeds of the IPO will be received by the selling shareholders, Mr Ravi Rajiv Kotia & Mr Amit Rameshbhai Kotia and not by the company.

The company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Shree Krishna Infrastructure IPO.

Shree Krishna Infrastructure IPO Events

Shree Krishna Infrastructure filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on September 7, 2018, for the fixed price IPO.

The offer will open on (undisclosed) and close on (undisclosed). The finalisation of basis of allotment is expected to happen by (undisclosed) and the initiation of refunds is expected to start by (undisclosed). The transfer of shares to demat accounts is expected to start on (undisclosed) and the expected listing date will be (undisclosed).

Shree Krishna Infrastructure IPO Recommendation

Now, let us discuss some of the key strengths and risks related to the business of Shree Krishna Infrastructure Limited.

The performance of any company is dependent on its management and employees to a large extent. One of the biggest strength of this company is its experienced personnel and their understanding of the market which helps the company in taking advantage of existing and future market opportunities.

Also, the company shares good relationships with its employees. The company focuses on maintaining good quality standards for all its products and services. They leverage their marketing skills and cordial relationships with their customers to increase their satisfaction levels.

The company’s strategies in order to enhance their capabilities of project execution and to increase their operating effectiveness and efficiency look quite promising.

Another major strength of the company is its good track record of financial performance over the last few years which is reflected in continuously rising revenues from the financial year ended March 31, 2014, to the financial year ended March 31, 2018, although profit margin is a bit of a concern.

Now, let us come to the discussion of risk factors of Shree Krishna Infrastructure Limited.

The company, promoters, Directors, etc. are involved in certain legal proceedings and any adverse ruling in them may pose a risk to the overall profitability of the company.

It needs certain approvals, permits and licenses for normal functioning of the business operations. Any failure in obtaining them or renewing the existing ones may adversely affect the business and have a negative impact on the overall financial health of the company.

The company’s business related to contract farming is dependent on crops which exposes the company to the risk that arises due to damage of crops due to adverse weather conditions.

The registered office of the company is on lease basis and not owned by it because of which the company is exposed to a risk of adverse effects on business and financed due to the cancellation of lease-related agreements.

The company has shown negative cash flows in the last few years and if continues to be like this in future, it may have a negative effect on the profitability of the business as cash balances are required for meeting working capital requirements, implementing expansion plans, paying dividends, etc.

Failure to attract new talent in their workforce and failure to expand their operations geographically are another risk factors for the company.

The company also faces the risk of competition from players belonging to both organized as well as unorganized sector.  

One of the most important risks for the business of the company is that the proceeds of the IPO will not be received by the company and after the listing of its shares on stock exchanges, it will be under strict scrutiny of its shareholders, public and regulatory agencies.

After analysing various aspects of the company, it can be said that investors may subscribe to Shree Krishna Infrastructure IPO for the long term for better gains.

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Shree Krishna Infrastructure Management Information

Currently, there are 5 Directors on the Board of Shree Krishna Infrastructure Limited. Mr Ravi Rajiv Kotia possesses an experience of 5 years as an  Account Executive and Administration in “Parekh Integrated Services Pvt Ltd” and “Shree Krishna Infrastructure Limited”.

Shree Krishna Infrastructure IPO Advisors Information

Finshore Management Services is acting as Book Running Lead Manager to the issue. Satellite Corporate Services Private is acting as the Registrar for the Shree Krishna Infrastructure IPO.