Should you invest in the IPO of this company offering integrated facilities management services?
The company has shown strong growth in revenue and net profit in recent years, with equally impressive figures in the first half of FY24, indicating continued growth for the full fiscal year.
About the Issue:
Krystal Integrated Services Ltd is launching its initial public offering (IPO) for equity shares valued at Rs 10 each. The IPO price range is set between Rs 680 and Rs 715 per equity share, resulting in a total issue size of Rs 300.13 crore at the upper price band.
The IPO is scheduled to commence on March 14, 2024, and will conclude on March 18, 2024. The market lot size for the IPO is 20 shares, with the option to apply for multiples of this lot. Individual retail investors have the opportunity to apply for a maximum of 13 lots, equivalent to 260 shares or a total investment of Rs 1,85,900 assuming the upper price band.
| IPO Details |
| IPO Opening Date |
March 14, 2024 |
| IPO Closing Date |
March 18, 2024 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 10 per equity share |
| IPO Price |
Rs 680 to Rs 715 per equity share |
| Min Order Quantity |
20 shares |
| Listing At |
BSE, NSE |
| Total Issue |
4,197,552 shares of FV Rs 10* |
| (Aggregating up to Rs 300.13 Cr)* |
| Fresh Issue |
2,447,552 shares of FV Rs 10* |
| (Aggregating up to Rs 175 Cr)* |
| Offer for Sale |
1,750,000 shares of FV Rs 10* |
| (Aggregating up to Rs 125.13 Cr)* |
| QIB Shares Offered |
50% of the Offer |
| Retail Shares Offered |
35% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Repayment/prepayment, in full or part, of certain borrowings availed of by the company
2. Funding working capital requirements of the company
3. Funding capital expenditure for the purchase of new machinery
4. General corporate purposes
Promoter holding
Prasad Minesh Lad, Neeta Prasad Lad, Saily Prasad Lad, Shubham Prasad Lad and Krystal Family Holdings Pvt Ltd are the promoters of the company. The promoters currently hold a pre-issue shareholding stake of 99.99 per cent in the company.
Company profile
Krystal Integrated Services Ltd stands out as one of India’s premier providers of integrated facilities management services, specializing in healthcare, education, public administration (including state government entities, municipal bodies, and other government offices), as well as airports, railways, metro infrastructure, and the retail sector.
The array of services provided encompasses soft services like housekeeping, sanitation, landscaping, and gardening, as well as hard services such as mechanical, electrical, and plumbing services. Additionally, the company offers solid, liquid, and biomedical waste management, pest control, and facade cleaning. Other offerings include production support, warehouse management, and airport management services, which cover aspects like multi-level parking and airport traffic management.
Furthermore, the company extends staffing solutions and payroll management to its clients, along with private security and manned guarding services, as well as catering services. As of September 30, 2023, the company had extended its services to 135 hospitals and medical colleges, 228 schools and colleges, one airport, four railway stations, and 30 metro stations. Additionally, it provided catering services on specific trains and train routes.
Financials
| Rs (in crore) |
FY21 |
FY22 |
FY23 |
H1FY24 |
| Revenue |
474 |
555 |
711 |
456 |
| Profit before tax (PBT) |
9 |
27 |
39 |
26 |
| Net Profit |
17 |
26 |
38 |
21 |
The company has successfully demonstrated robust growth in both its revenue and net profit over the past few years. In FY23, both revenue and net profit witnessed strong year-on-year growth, with a 28 per cent surge in revenue and a 46 per cent rise in net profit compared to FY22.
The H1FY24 figures were equally impressive, suggesting robust growth for FY24 if the current pace is maintained. The company boasts a return on equity (RoE) and return on capital employed (RoCE) of 23 per cent and 29 per cent, respectively, for the fiscal year 2023.
Valuation and outlook
| Company Name |
P/E |
P/B |
RoE (%) |
| Krystal Integrated Services Ltd |
20 |
4 |
23 |
| Listed Peers |
| Quess Corp Ltd |
35 |
3 |
9 |
| SIS Ltd |
22 |
3 |
16 |
| Updater Services Ltd |
65 |
2 |
10 |
The issue is priced with a P/BV ratio of 4.49 times, calculated using its Net Asset Value (NAV) of Rs 159.39 as of September 30, 2023. When we calculate the PE ratio for the company by considering the annualized FY24 earnings relative to the fully diluted paid-up equity capital, the resulting PE ratio stands at 20. Krystal Integrated Services Ltd exhibited superior performance in comparison to its listed peers, taking into account both valuation and returns simultaneously.
The company's diversified operations and extensive geographic presence serve to mitigate potential risks for the business. Coupled with a scalable and efficient business model, sector-specific focus, longstanding relationships with partner companies, and a robust financial track record, these factors collectively represent significant strengths for the company. Hence, we advise investors to contemplate subscribing to the offering with a long-term perspective.
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