Kaka Industries Limited IPO
i. Kaka Industries is a PVC profile brand, focused primarily on manufacturing of polymer-based profiles which finds application in doors, windows, partitions, false ceilings, wall paneling, kitchen cabinets & other interior and exterior works.
ii. Their product portfolio has over 1200 SKU’s covering PVC Profile, uPVC door & window profile, WPC Profile & sheet in various sizes, specifications and colours. They are also engaged in fabrication of factory-made PVC & Solid PVC doors. Except for WPC (Wood-polymer composite) profile and doors, all our products are non-wood based, which substitute wood-products and results in saving of trees
iii. The company market its products through an extensive network of 300 dealers spread across over 20 States and Union Territories of India
iv. They are currently in process of setting up a new manufacturing plant in village Lasundra, Kheda district (Gujarat), in order to increase their manufacturing capabilities. The land on which the said plant is being constructed comprises of over 49,000 sq. mtrs. area and is obtained by them on lease from their Promoter Director, Mr. Bhavin Rajeshbhai Gondaliya for a period of 30 years till March 26, 2053
Competitive Strengths
i. Extensive network of dealers covering major parts of India
ii. Wide Range of Products
iii. Stringent quality control mechanism ensuring standardized product quality
iv. In-house Manufacturing capabilities
Objects of the Kaka Industries Limited IPO:
Kaka Industries Limited IPO Details:
Open Date: | Jul 10 2023 |
Close Date: | Jul 12 2023 |
Total Shares: | 3,660,000 |
Face Value: | ₹ 10 Per Equity Share |
Issue Type: | Book Built Issue IPO |
Issue Size: | 21.23 Cr. |
Lot Size: | 2000 Shares |
Issue Price: | ₹ 55-58 Per Equity Share |
Listing At: | BSE SME |
Listing Date: | Jul 20 2023 |
Promoters And Management:
Financials of Kaka Industries Limited IPO:
Particular (In Lakhs) | Mar-21 | Mar-22 | Mar-23 |
Equity Share Capital | 250.00 | 250.00 | 1,000.00 |
Reserves | 494 | 991 | 957 |
Borrowings | 1,999 | 2,736 | 4,014 |
Trade Payables | 645 | 455 | 433 |
Other Liabilities | 181 | 183 | 363 |
Total Liabilities | 2,824 | 3,373 | 4,810 |
Net Block | 768 | 940 | 1,113 |
Capital Work in Progress | 0 | 0 | 799 |
Investments | 0.2 | 201 | 252 |
Other Assets | 9 | 8 | 19 |
Total NC Assets | 777 | 1,149 | 2,182 |
Receivables | 1,452 | 1,408 | 1,862 |
Inventory | 1,146 | 1,849 | 1,510 |
Cash & Bank | 11 | 10 | 715 |
Other Assets | 181 | 198 | 498 |
Face value | 10 | 10 | 10 |
Particular (In Lakhs) | Mar-21 | Mar-22 | Mar-23 |
Sales | 7,875 | 11,696 | 15,850 |
Raw Material Cost | 5,596 | 9,192 | 11,451 |
Change in Inventory | 2 | -561 | 366 |
Employee Cost | 722 | 892 | 975 |
Other Expenses | 917 | 1,201 | 1,704 |
Other Income | 4 | 14 | 38 |
EBITDA | 641 | 986 | 1,392 |
EBITDA Margin | 8.13% | 8.43% | 8.78% |
Depreciation | 67 | 107 | 136 |
Interest | 157 | 213 | 253 |
Profit before tax | 417 | 666 | 1,004 |
Tax | -114 | -169 | -285 |
Net profit | 303 | 498 | 719 |
NPM (%) | 3.83% | 4.24% | 4.52% |
Particular (In Lakhs) | Mar-21 | Mar-22 | Mar-23 |
Cash From Operating Activity | |||
Profit From Operation | 641 | 984 | 1,422 |
Receivable | -378 | 44 | -488 |
Inventory | -188 | -703 | 339 |
Payable | -419 | -190 | -21 |
Other WC Items | -71 | 30 | -213 |
Working Capital Changes | -1,056 | -819 | -383 |
Direct Taxes | -82 | -214 | -199 |
Net Cash Inflow from Operating Activity | -497 | -49 | 840 |
Cash from Investing Activity | |||
Fixed assets purchased | -736 | -354 | -1,148 |
Fixed assets sold | 1 | 75 | 30 |
Investment sold | 0 | -201 | -51 |
Dividends received | 0 | 0.02 | 0.04 |
Other investing items | 0 | 4 | 9 |
Net cash inflow from investing activities | -735 | -476 | -1,160 |
Cash from Financing Activity | |||
Proceeds from shares | 299 | 0 | 0 |
Proceeds from borrowings | 1,086 | 737 | 1,278 |
Intrest paid fin | -157 | -213 | -253 |
Net Cash Flow | -3 | -2 | 705 |
Comparison With Peers:
Name of the Company | Revenue (In Crore) | PAT (In Crore) | EPS ( in Rs) | P/E | CMP | Mcap (In Crore) |
Kaka Industries Limited | 158 | 7.2 | 5.25 | 11.03 | 58 | 79 |
Dhabriya Polywood Limited | 171 | 8 | 7.84 | 26.4 | 207 | 224 |
Sintex Plastics Technology Limited | 3 | -565 | -8.88 | N/A | 1.5 | 95 |
Recommendation on Kaka Industries Limited IPO:
A) Strengths of Kaka Industries
1. Diverse Product Portfolio: The company has a wide product range with over 1200 SKUs which includes PVC Profile, uPVC door & window profile, WPC Profile & sheet etc. This range caters to a broad spectrum of customer needs, increasing its potential market base. 2. Established Brand Names: The company's products are marketed under recognized brand names, which can instill trust in the consumer and positively influence buying decisions. 3. Sustainability: The company's non-wood based products are an eco-friendly alternative to traditional wood products, contributing to saving trees. This sustainability factor can appeal to environmentally conscious consumers and businesses. 4. Wide Distribution Network: The company has an extensive distribution network with 300 dealers spread across 20 states and Union Territories in India. This geographic reach enables the company to deliver its products to a wide customer base. 5. Accredited Quality Management: The company's manufacturing facilities have been accredited with various ISO certifications, ensuring the production of high-quality products. 6. Government Empanelment: Being an approved vendor for government organizations enhances the company's credibility and opens up opportunities for large scale, stable contracts. 7. Experienced Leadership: The company's founder has over 20 years of industry experience, providing strategic guidance based on in-depth knowledge of the market and product. 8. Steady Revenue Growth: The company's revenue has shown a consistent increase over the past few years, indicating a successful business model and stable financial health.B) Weaknesses of Kaka Industries
1. Geographic Concentration of Sales: A significant portion of the company's revenue (63.73%) comes from Gujarat, which exposes the company to geographic risk. Any local economic disruptions could have an outsized impact on the business. 2. Dependence on Promoter Director: The new manufacturing plant is leased from the Promoter Director, creating a potential conflict of interest and risk if the relationship sours or if the director's personal circumstances change. 3. Limited Manufacturing Capacity: Although the company is setting up a new manufacturing plant, its current production capacity might limit its ability to scale up quickly or meet unexpected increases in demand. 4. Late Entry into Manufacturing: Despite the founder's experience, the company only started manufacturing in 2012 and therefore may lack the established infrastructure and efficiencies of longer-established competitors. 5. Dependence on External Suppliers: The company's reliance on suppliers for raw materials could be a vulnerability if supply chain disruptions occur or if suppliers increase prices. 6. Unbalanced Revenue Concentration: Despite having a wide network of dealers, there is a disparity in revenue generation from various states, indicating a potential inefficiency in penetrating these markets.C) Products of the Company
1. PVC Profile: These are versatile components used in furniture, panels, and frames. They come in different finishes and shapes, catering to a wide array of aesthetic and functional needs. 2. uPVC door and window profile: These products are energy-efficient, durable, and require low maintenance. The range of sizes accommodates different construction needs, making them a suitable choice for diverse settings. 3. WPC Profile & Sheet: Combining the benefits of wood and plastic, these profiles are durable and versatile. They are primarily used for doors and wall panels and come in various sizes and finishes. 4. Doors: The company manufactures PVC doors, which are durable, lightweight, and resistant to various weather conditions. They offer these doors in a range of sizes to suit different requirementsD) Object of the Issue
The company is using ~7 Cr to retire debt and ~7 Cr for working capital.E) Financial Performance of Kaka Industries
1. The revenue has grown from 41 Cr in Fy20 to 153 Cr in Fy23 registering a CAGR growth of 55%. 2. Gross Margins have also improved from 10% in Fy20 to 28% in Fy23. 3. EBITDA Margins have also increased from 5.6% in Fy20 to 8.49% in Fy23. 4. PAT has increased from 1.43 Cr in Fy20 to 7.42 Cr in Fy23. 5. Kaka Industries has decent ROE of 17.5% post IPO in Fy23. 6. Kaka Industries has decent ROCE of 20% in Fy23. 7. Total Debt as on 31.03.2023 is 40 Cr and Net-worth is 19 Cr. D/E is 2x which is on higher side. 8. In the last 3 years, total cash generated from the operations is ~3 Cr and total capex done is ~23 Cr. That is why they have taken debt of ~19 Cr to fuel the capex. The results of capex are visible in the revenue growth.F) Valuation of Kaka Industries
The IPO is coming at P/E 11x and M.cap of 75 Cr which looks decently priced as compared to competitors.Lead Manager of Kaka Industries Limited IPO:
Registrar of Kaka Industries Limited IPO:
Company Address:
Discussion on Kaka Industries Limited IPO:
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