K.P.I. Global Infrastructure Limited IPO

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(i) KPI Global Infrastructure Limited IPO is a solar power generating Company focused on providing solar power, both as an Independent Power Producer (“IPP”) under the brand name of ‘Solarism’ and as Captive Power Producer (“CPP”).

(ii) They build, own, operate and maintain grid-connected solar power projects as IPP and generate revenue by entering into Power Purchase Agreements (“PPA”) with third parties for selling power units generated through their solar projects. They develop, transfer, operate and maintain grid-connected solar power projects for CPP customers and generate revenue by selling these projects to third parties for their captive use requirements. Both these businesses, IPP and CPP, are currently carried out at their plant located at Sudi & Tanchha village, Amod, Bharuch, Gujarat (Solarism Plant).

(iii) The company in 2014 has initiated a ~13.25 km long 66 KV transmission line from their Solarism Plant to the Gujarat Energy Transmission Corporation Limited (“GETCO”) substation located at Amod, Bharuch, Gujarat (Amod Substation), for evacuation of the solar power generated at the Solarism Plant.

(iv)  In 2016, they commissioned the first solar power plant for 5 MW on the leased land at Solarism Plant and

(v) In 2017, they commissioned another solar power plant for 10 MW on their owned land at Solarism Plant (Both projects referred to as Unit I).

(vi) In 2018, they completed CPP sales of 0.45 MW of solar power plant to Laser Fibers Private Limited.

(vii) The company proposes to increase their solar power generation capacity by setting up another solar power project for 25 MW at Sudi, Samiyala & Tanchha village, Amod, Bharuch, Gujarat (Referred to as Unit II). The estimated cost of this project would be 132 Cr and the proposed date of commercial commencement is July 2019.  Post the commercial commencement, our total solar power generation capacity would increase to 40 MW.

(viii) They have entered into bilateral PPA’s for a period of 3 years with reputed  industrial consumers such as Mafatlal Industries Limited (for their two units located at Navsari and one unit located at Nadiad), Best Paper Mills Private Limited (for their two units located at Vapi) and Meghmani Organics Limited (for their three units located at Dahej, Ankleshwar and Panoli) for direct sale of the solar power generated at our Solarism Plant. The rate of the PPAs are currently at around ~Rs. 6.58 per unit, which have been priced to arrive at an average of around 7% discount to the prevailing per unit price of the power rates of the DISCOMs, less other adjustments.

(ix) Management Interaction

Objects of the K.P.I. Global Infrastructure Limited IPO:

Objective of K.P.I. Global Infrastructure Limited IPO are: 1. To part finance setting up a 25 MW Solar Power Project at Bharuch district of Gujarat ("Proposed Project / Unit II"). 2. For General Corporate Purposes.

K.P.I. Global Infrastructure Limited IPO Details:

Open Date: Jan 08 2019
Close Date: Jan 11 2019
Total Shares: 4,992,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: Rs 39.94 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 80 Per Equity Share
Listing At: BSE SME

Promoters And Management:

Promoters of K.P.I. Global Infrastructure Limited IPO Company are: Mr. Faruk G. Pate

Financials of K.P.I. Global Infrastructure Limited IPO:

Year Revenue(Lacs) OPM PAT(Lacs) NPM No.of Shares(Lacs) EPS
2016 2,751.12 53.75% 767.97 27.9% 35 21.94
2017 2,602.09 68% 812.49 31.2% 55 14.77
2018 3,158.28 59.80% 1,140.92 36.1% 129.444 8.81
6MFY19 1,820.80 47% 387.17 21% 130.75 2.96

Comparison With Peers:

As per DRHP, the company does not have any Peer.

Recommendation on K.P.I. Global Infrastructure Limited IPO:

Review and Recommendation of K.P.I.Global Infrastructure Limited IPO from our side is:4/10 [The Company has shown good performance in the last 3 years in terms of Revenue and PAT growth. The Issue is coming at a reasonable valuation. However, the solar as a sector is highly competitive and lately, the solar companies in the SME platform have not done well]

Lead Manager of K.P.I. Global Infrastructure Limited IPO:

  1. Vivro Financial Services Private Limited

Registrar of K.P.I. Global Infrastructure Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

K.P.I. Global Infrastructure Limited Shop No A-1/2, Firdos Tower, Near Fazal Tower, Adajan Patia, Surat - 395 009, Gujarat, Phone: +91-261-2764757 Fax: +91-261-2764757 Email: info@kpgroup.co Website: www.kpiglobal.kpgroup.co

Bid Details of K.P.I. Global Infrastructure Limited IPO as on
11 Jan 2019 | 11:58:03 PM

Category No.of shares offered No. of shares bid
2,371,200 30,243,200
2,371,200 24,278,400
249,600 249,600
4,992,000 54,771,200
QIBs Yes
QIBs+HNIs Subscription 12.75X
Retail Subscription 10.24X
Total Subscription 11.50X

Discussion on K.P.I. Global Infrastructure Limited IPO:

    Surana Steel Tubes Ltd
    Lm..Pantomath
    (NSE).
    Issue will open on 25/1/19 & will close on 29/1/19.

    Share price 52/-
    Lot size 2000 share.
    Lot value 1,04,000/-

    Fwd..

    Highly reputed promoters reasonable valuations and strong order book visibility makes this ipo a must apply. Group company KP Energy ltd has given very good returns in a very short period of time.

    Liquidity and leverage Position on the balance sheet as on FY18

    1. Current Ratio= 1.60( Reasonable)

    2. Debt/Networth= 0.64( Comfortable)

    Conclusion: The company has reasonable ratios.

    EPS and P/E Calculations(Pre-Issue) based on FY18 Financials

    1. PAT (FY18)= 11.40 Cr
    2. No. Of Shares = 1.2944 Cr
    3. EPS= 8.80
    4. P/E= 9.09

    EPS and P/E Calculations(Post-Issue) based on FY18 Financials

    1. PAT (FY18)= 11.40 Cr
    2. No. Of Shares = 1.8067 Cr
    3. EPS= 6.30
    4. P/E= 12.69

    Conclusion: The company has a reasonable valuation.

    New to IPOs, but why is YoY PAT down from 1140.00 lakhs to 387 lakhs between March and September 2018? PE appears good at 13. RoNW is choppy and dropped from a whopping 55% in Mar 16 to 15% in Mar 18.

      First of all, it is not YoY. The company has a PAT of 11.40 Cr in FY18 and a PAT of 3.87 Cr in first Six months of FY19.

      The RONW has gone down from 55% in FY16 to 20% IN FY18 due to heavy equity dilution. The Equity of 3.5 CR in FY16 has gone to 12.94 Cr in FY18.

    Please avoid this

    The company has pledged more than 17% shares even before the ipo with the banks. Pledge is not a problem but history suggest previous issue waa solar with same business is down.
    No point to apply in this company which has pledged shares and solar sector. Infact even WAA solar is looking much better with the correction. fundamentals says not to apply.
    better buy deccan healthcare from secondary market or other good sme sector like shreeoswal seeds,dhruv consultancy which are ruling at discount.

      Please read the prospectus carefully – I have read it now and note the following issues:

      (1) Pledge: The pledge is with SBI which has given approval for creating lock-in by removal of pledge and then re-pledged: The company is servicing debt regularly as there is no default or delay mentioned for the debt

      (2) WAA Solar: On studying the prospectus, one can realise it is not comparable to WAA Solar – While WAA is having only few IPP assets and one PPA with a DISCOM, KPI has 15 MW up & running with reputed parties & at a rate of ~ Rs. 6.58 per unit – Also, WAA does not do CPP but KPI is doing CPP very well – If one will examine carefully, only thing common is solar sector!!