Karnika Industries Limited IPO
i. Karnika Industries is a manufacturer through job work, trader and exporter of garments. They basically manufacture through job work all types of kids wear i.e., shorts, joggers, capri, tees, rompers, sleep suits, pyjamas, winter wear, infant wear etc. They have constructed well-established manufacturing units for designing, preparation of sample, quality inspection, ironing and packing of Garments that is equipped with all the necessary hi-tech machines and tools that are required for a modern manufacturing unit. Machinery that is equipped in their infrastructure is operated by their highly experienced team of professionals. They are manufacturing majority of their products through job work, we are capable of undertaking bulk requirements of their clients and deliver within stipulated time schedule.
ii. The company majorly focuses in high quality of fabrics and garments across globe utilizing best technology, delivering quality textiles at the most competitive prices and maintaining long term association with their clients. The level of advancement determines the productivity of machines and labour, which in turn, determines the production and profitability of the Company. Their technical team is equipped with modern technology and processing techniques by virtue of which they are able to ensure quality output.
iii. They sell their products under brand of KARNIKA and sub category as KARNIKA Care, KARNIKA Cool, KARNIKA Cube, KARNIKA Life, KARNIKA Key, KARNIKA Club.
iv. Karnika has reputed client base which includes various reputed Commission Agents and retail sectors clients. Karnika is growing with rapid pace and making its presence in market with quality and professional work
v. The Business Process includes use of yarn and fabrics during the manufacturing process. Besides, they are also able to offer their customers fabric alternatives for their existing collections thus, create important added values in terms of pricing, quality and delivery terms. They endeavour to satisfy customers by continuous improvement through process innovation and quality maintenance.
vi. Karnika has been organising trade shows and exhibitions on a pan India basis from time to time. Through these exhibitions, they have not only magnified their brand visibility but also created opportunities for others to network and collaborate with us.
Competitive Strengths
i. Diversified Product Portfolio
ii. Consistency in Quality and Service Standards
iii. Cost effective production and timely fulfilment of orders
Objects of the Karnika Industries Limited IPO:
Karnika Industries Limited IPO Details:
Open Date: | Sep 29 2023 |
Close Date: | Oct 05 2023 |
Total Shares: | 3,299,200 |
Face Value: | ₹ 10 Per Equity Share |
Issue Type: | Fixed Price Issue IPO |
Issue Size: | 25.07 Cr. |
Lot Size: | 1600 Shares |
Issue Price: | ₹ 76 Per Equity Share |
Listing At: | NSE Emerge |
Listing Date: | Oct 13 2023 |
Promoters And Management:
Financials of Karnika Industries Limited IPO:
Particulars ( In Lakhs ) |
2021 |
2022 |
2023 |
Revenue from Operations | 4,746 | 9,881 | 13,096 |
Other Income | 33 | 12 | 148 |
Total Revenue | 4,779 | 9,893 | 13,244 |
Cost of material consumed | 3,966 | 8,591 | 9,623 |
Purchase of Stock in Trade | 477 | 1,094 | 1,772 |
Changes in Inventories | -288 | -1,459 | -1,206 |
Employee benefits expenses | 173 | 299 | 620 |
Other Expenses | 208 | 396 | 732 |
EBITDA | 243 | 972 | 1,703 |
Depreciation & Amortisation | 14 | 22 | 35 |
Finance Cost | 104 | 233 | 517 |
EBIT | 229 | 950 | 1,668 |
OPM (%) | 5.08% | 9.83% | 12.86% |
PBT | 125 | 717 | 1151 |
Tax | 44 | 263 | 298 |
PAT | 82 | 454 | 852 |
NPM (%) | 1.71% | 4.59% | 6.44% |
No.of Shares | 123.99 | 123.99 | 123.99 |
EPS | 0.65 | 3.66 | 6.87 |
Comparison With Peers:
Name of the Company | Revenue (In Crore) | PAT (In Crore) | EPS ( in Rs) | P/E | CMP | Mcap (In Crore) |
Karnika Industries Limited | 131 | 9 | 6.87 | 11.1 | 76 | 94 |
S.P. Apparels Limited | 1,078 | 83 | 32.88 | 17.9 | 511 | 1,284 |
Veekayem Fashion and Apparels Limited | 235 | 2 | 3.08 | 26.3 | 81 | 48 |
Recommendation on Karnika Industries Limited IPO:
Overview of Karnika Industries
Karnika Industries is a specialized manufacturing company that outsources the production of a wide range of kids' wear, including shorts, joggers, capri, tees, rompers, sleep suits, pyjamas, winter wear, and infant wear, among others. The company acts as a middleman, securing bulk orders from major corporations and subcontracting the work to job shops.Experience and Leadership
The company has been operational for the past seven years under the leadership of its promoter, Mr. Niranjan Mundhra, and Whole Time Directors, Mr. Shiv Shankar Mundhra and Mr. Mahesh Kumar Mundhra. Each of these individuals brings seven years of experience to the table, particularly in the garment industry.Financials and Challenges
One of the main challenges Karnika Industries faces is scalability. The business model necessitates a high working capital and a significant labor force. Over the past three years, the company has grown its revenue from INR 50 Crore to INR 130 Crore. However, its short-term debt has surged from INR 14 Crore to INR 54 Crore, and its inventory has also increased from INR 11 Crore to INR 48 Crore. The IPO aims to raise INR 25 Crore, which will be allocated solely for meeting working capital requirements.Sectoral Competition and Historical Context
The garment manufacturing sector is highly competitive and generally not considered a lucrative investment avenue. As a case in point, SP Apparel, another company in the same sector, has not yielded substantial returns for its investors over the last five to six years. Currently, its shares are trading at a P/E ratio of 18x.Valuation and Investment Outlook
Karnika Industries is launching its IPO at a P/E ratio of 12x. While the valuation seems reasonable, the overall sector does not appear to be particularly enticing for investment purposes.Conclusion
Karnika Industries has demonstrated strong revenue growth and has experienced leadership at the helm. However, the company's high working capital requirements, along with its increased short-term debt and inventory levels, pose a concern. The sector itself is highly competitive and has not been lucrative for investors historically. While the IPO valuation seems fair, the sector overall does not present a compelling investment caseLead Manager of Karnika Industries Limited IPO:
Registrar of Karnika Industries Limited IPO:
Company Address:
Discussion on Karnika Industries Limited IPO:
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