Krishca Strapping Solutions Limited IPO
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i. Established in the year 2017 at Sivakasi, Tamil Nadu, “Krishca Strapping Solutions Private Limited” is a Private Limited based firm, engaged as the Manufacturer and Wholesaler of Strapping Tool, Strapping Seal, etc. Their products are high in demand due to their premium quality and affordable prices.
ii. At their Chennai facility, Heat treated high tensile Steel Straps are manufactured using state-of-the-art equipment and supervised by expert metallurgists and engineers.
i. PLC Controlled automatic production line
ii. Automated heat treatment process–Uniform grain structure
iii. Pollution free production process – Lead free
iv. Super Jumbo coils upto 500 Kgs
iii. Their Steel strap quality parameters are in line with the American, European and Indian standards.
i. IS 5872:1990 – Cold rolled steel straps (box strappings) specification
ii. ASTM D-3953 – Standard Specification for Strapping, Flat Steel and Seals
iii. BS EN 13246:2001 – Packaging. Specification for tensional steel strapping
iv. Company’s Unique Features:
i. State-of-the-art production line
ii. Extraordinary Consistency Exceptional steel
iii. In-depth testing and tracking traceability
iv. First quality raw material Finest quality strap
v. Remarkable surface finish
vi. Custom Branding
Objects of the Krishca Strapping Solutions Limited IPO:
The Company intends to utilize the Net Fresh Issue Proceeds for the following Objects (“Objects of the Issue”):
1) Capital Expenditure for setting up of New Strapping Line;
2) Repayment of certain secured borrowings in full availed by the Company;
3) General Corporate Expenses; and
4) Issue Expenses
Krishca Strapping Solutions Limited IPO Details:
| Open Date: | May 16 2023 |
| Close Date: | May 19 2023 |
| Total Shares: | 3320000 |
| Face Value: | ₹ 10 Per Equity Share |
| Issue Type: | Book Built Issue IPO |
| Issue Size: | 17.93 Cr. |
| Lot Size: | 2000 Shares |
| Issue Price: | ₹ 51-54 Per Equity Share |
| Listing At: | NSE Emerge |
| Listing Date: | May 29 2023 |
Promoters And Management:
i. Mr. Lenin Krishnamoorthy Balamanikandan aged 30 years, is Promoter, Managing director and the Chairman of the Company. . He is the Founder of Krishca Strapping Solutions Limited. He holds the degree of Bachelor in Engineering in Electronics and Communication from Anna University and a Master of Science (Information Security) degree from the University of London, UK where he specialized in advanced cyber security, corporate security & privacy practices. He has over 3 years of work experience as a cyber-security consultant in UK where he has handled several cyber security compliance projects for companies such as Visa and Samsung. He has performed a detailed market research on steel strapping for almost a year between 2017-18 for setting up this Company. He has played a key role in growth and development of the Company.
ii. Mr. Terli Venkata Shivaji aged 49 years, is Whole Time Director of the Company. He is a commerce graduate from Osmania University. He has vast knowledge and experience in the Steel strapping.
iii. Mrs. Navaneethakrishnan Saraladevi aged 32 years, is the Whole Time Director cum Chief Financial Officer of the Company. She holds MBA (Marketing) degree from Madurai Kamaraj University. She has over 5 years of experience in Sales and Finance.
Financials of Krishca Strapping Solutions Limited IPO:
A) Balance Sheet
B) P&L Statement
C) Cash Flow Statement
| Particulars (in Lakh) | 2020 | 2021 | 2022 |
| Equity Share Capital | ₹301 | ₹301 | ₹500 |
| Reserves | -₹237 | -₹422 | -₹341 |
| Borrowings | ₹827 | ₹1,338 | ₹939 |
| Trade Payables | ₹4 | ₹58 | ₹103 |
| Other Liability | ₹342 | ₹17 | ₹20 |
| Total Liability | ₹1,237 | ₹1,292 | ₹1,221 |
| Fixed Assets Block | ₹550 | ₹613 | ₹450 |
| CWIP | ₹4 | ₹0 | ₹141 |
| Investments | ₹0 | ₹0 | ₹0 |
| Other Assets | ₹1 | ₹1 | ₹0 |
| Total Non-Current Assets | ₹555 | ₹614 | ₹591 |
| Receivables | ₹77 | ₹229 | ₹560 |
| Inventory | ₹157 | ₹196 | ₹146 |
| Cash and Cash Balance | ₹3 | ₹23 | ₹31 |
| Other Assets | ₹125 | ₹230 | ₹215 |
| Total Current Assets | ₹362 | ₹678 | ₹952 |
| Total Assets | ₹1,237 | ₹1,292 | ₹1,221 |
| Particulars ( in Lakh ) | 2020 | 2021 | 2022 | 2023 |
| Sales | ₹96 | ₹941 | ₹1,861 | 6351 |
| Sales Growth | 0.00 | 8.80 | 0.98 | 241.27% |
| COGS | ₹73 | ₹642 | ₹1,273 | 4746 |
| COGS % of Sales | 76.04% | 68.23% | 68.40% | 74.73% |
| Gross Profit | ₹23 | ₹299 | ₹588 | 1605 |
| Gross Margins | 23.96% | 31.77% | 31.60% | 25.27% |
| Employee Benefit & Other Expenses | ₹170 | ₹242 | ₹278 | 447 |
| Employee & Other Expense Sales % | 177.08% | 25.72% | 14.94% | 7.04% |
| EBITDA | -₹147 | ₹57 | ₹310 | 1158 |
| EBITDA Margins | -153.13% | 6.06% | 16.66% | 18.23% |
| Interest Cost | ₹32 | ₹74 | ₹55 | 64 |
| Interest %of Sales | 33.33% | 7.86% | 2.96% | 1.01% |
| Depreciation | ₹48 | ₹81 | ₹95 | 108 |
| Dep %of Sales | 50% | 8.61% | 5.10% | 1.70% |
| EBIT Margins | -203.13% | -2.55% | 11.55% | 16.53% |
| Other Income | ₹2 | ₹30 | ₹11 | 9.88 |
| Earnings Before Tax | -₹225 | -₹68 | ₹171 | 920 |
| EBT % Sales | -2.34 | -0.07 | 0.09 | 14.49% |
| Tax | ₹1.00 | ₹0.00 | ₹21.00 | 137 |
| PAT | -₹226 | -₹68 | ₹150 | 785 |
| NPM | -235.42% | -7.23% | 8.06% | 12.36% |
| No. of Equity Shares | 30.10 | 30.10 | 50 | 120 |
| Earning Per Share | -₹7.51 | -₹2.26 | ₹3 | 6.54 |
| Particulars (Lakh) | 2020 | 2021 | 2022 | 2023 |
| Cash From Operating Activity | -₹56 | -₹149 | -₹3 | ₹240 |
| Cash from Investing Activity | -₹267 | -₹255 | -₹139 | -₹137 |
| Cash from Financing Activity | ₹309 | ₹425 | ₹150 | -₹126 |
| Net Cash Flow | ₹3 | ₹23 | ₹31 | -₹23 |
Comparison With Peers:
| Name of the Company | Revenue(Cr) | Profit(Cr) | EPS | P/E | CMP | MCap |
| Krishca Strapping Solutions Ltd. | 69 | 8.57 | 7.10 | 7.61 | 54 | 65.18 |
| Usha Martin Ltd. | 6,268 | 351 | 11.49 | 20.10 | 232 | 7,059 |
| Metal Coatings India Ltd. | 172 | 2 | 2.55 | 39.2 | 100 | 73.3 |
Recommendation on Krishca Strapping Solutions Limited IPO:
Review and Recommendation of Krishca Strapping IPO by IZ team is 6/10
1. Krishca Strapping is a relatively new company, founded in 2017, engaged in the manufacturing and wholesaling of strapping tools and strapping seals. This indicates that the company has limited experience in the industry.
2. The company's Chennai facility utilizes state-of-the-art equipment and has expert metallurgists and engineers overseeing the production of heat-treated high tensile steel straps. This suggests a commitment to quality manufacturing processes.
3. In the 11 months of FY23, Krishca Strapping generated a total revenue of 63 crores, with 3 crores coming from exports. This shows a positive revenue trend and a potential for international expansion.
4. Krishca Strapping currently holds a market share of approximately 7.5% in the steel straps industry. The overall market size is projected to grow by 5-10% over the next 15 years. However, the market leader, Signode India, holds a significant market share of around 50% and it is having revenue of ~1700 Cr and ~200 CR profit in Fy22. This indicates strong competition and potential challenges for Krishca Strapping to expand its market share significantly.
5. The strategic location of Krishca Strapping's factory in Chennai, one of the largest automotive hubs in India, provides easy access to raw materials from both local and overseas sources. This enables the company to procure raw materials at competitive prices.
6. The proximity of the factory to an international port allows Krishca Strapping to export its products at a lower cost, which can be advantageous for expanding its customer base globally.
7. Chennai's connectivity to neighboring states and the company's status as the only steel strapping manufacturer in the region offer benefits such as faster dispatches and lower freight costs for local customers. This can provide a competitive edge in the local market.
8. The IPO funds will be utilized for capital expenditure, primarily setting up a new strapping line, and for the repayment of certain borrowings. This indicates a clear plan for utilizing the funds raised through the IPO.
9. The company's debt-to-equity ratio (D/E) post IPO is expected to be 0.47x, which is below 1 and considered favorable. This suggests a manageable level of debt for the company.
10. The company's receivables amount to around 10 crores, with a receivables days figure of approximately 58, which indicates a decent collection period.
11. Krishca Strapping experienced losses in FY20 and FY21 due to the low scale of operations. However, the company demonstrated excellent performance in FY22 and FY23, with revenues of 18 crores and 63 crores, respectively. This indicates a positive turnaround for the company.
12. The post-IPO return on equity (ROE) and return on capital employed (ROCE) are impressive at 32% and 32.8%, respectively. This indicates efficient utilization of funds and a strong financial performance.
13. The IPO is priced at a market capitalization of 65 crores and a price-to-earnings ratio (P/E) of approximately 8x, which seems reasonably priced compared to industry standards.
In conclusion, Krishca Strapping IPO shows some positive aspects, such as its growth potential, strategic location, improving financial performance, and reasonable valuation. However, there are challenges posed by a competitive market and the company's relatively short operational history.
Lead Manager of Krishca Strapping Solutions Limited IPO:
Registrar of Krishca Strapping Solutions Limited IPO:
Company Address:
Building 01B, LOGOS Mappedu Logistics Park Satharai Village,
Thiruvallur Taluk Thiruvallur District, Tamil Nadu 631203, India
Discussion on Krishca Strapping Solutions Limited IPO:
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