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Kaka Industries Limited IPO envisages to raise 21.23 Crore through fresh issue of equity shares. The lot size is 2000 shares and the price is 55 to 58 Rs per share. The company is shall list at BSE SME platform. Kaka Industries Limited manufactures polymer-based profiles for application in doors, windows, partitions, false ceilings, wall paneling, kitchen cabinets & other interior and exterior works.

About :

• Incorporated in 2019, Kaka Industries Limited is 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.
• It product portfolio has over 1200 SKU’s covering PVC Profile, uPVC door & window profile, WPC Profile & sheet in various sizes, specifications and colours.
• It is 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.
• The compnay markets its products through an extensive network of 300 dealers spread across over 20 States and Union Territories of India. The distribution network comprises of 3 depots situated in Gagilapur (Telangana), Dadri (Uttar Pradesh) and Surat (Gujarat).
• Kaka Industries Limited has brands in the name of Kaka, Poly Plast, Jinwin, Nice Plast and Barbarika under which it sell its products.
• Kaka Industries Limited has three manufacturing units in village Zak, Gandhinagar district, Gujarat, which has a combined installed capacity of 15,425 MT for manufacturing PVC profile, 2,995 MT for WPC profile & sheet, 2,022 MT for uPVC door & window profile.

• It has a well-equipped laboratory, modern technology and testing equipments with supporting environment and facilities, to ensure that the products conform with the desired quality.
• Rajesh Dhirubhai Gondaliya, Bhavin Rajeshbhai Gondaliya, and Rajeshkumar Dhirubhai Gondaliya (HUF) are the company promoter

Kaka Industries IPO: Financials

Anchor Investors

Kaka Industries IPO: Salient Points

• Promoters hold 95.32% stake in the company which after the IPO shall stand at 69.78%.
• Majority of our revenue is dependent on single business segment i.e. polymer based profiles.
• We procure PVC resin mainly from Reliance Industries Limited.
• Kaka Industries Limited has a wide range of products. The Company offers over 1200 SKU’s covering PVC Profile, uPVC door & window profile, WPC Profile & sheet in various sizes, specifications and colours. Having a wide portfolio of product categories enables it to cross-sell to a large customer base.
• It has extensive network of dealers covering major parts of India. It has a network of 300 dealers spread across over 20 states and Union Territories in India.
• For the Fiscal 2023, it derived major portion of revenue from the state of Gujarat (i.e. 63.73%), followed by Telangana (8.67%), Maharashtra (7.49%), Karnataka (4.61%) and remaining 15.50% were from other 19 states & union territories.
• It is also empaneled as “Approved Vendor” in two of the Government Organizations namely, Gujarat State Police Housing Nigam Limited and Military Engineer Services (Lucknow & Ahmedabad).
• The primary raw materials comprise PVC resin, which is derived from crude oil by-products
• For Fiscals 2021, 2022 and 2023, its cost of materials consumed (on standalone basis) were ₹ 5596.42 lakhs, ₹ 9191.58 lakhs and ₹ 11,029.24 lakhs, respectively, representing 71.07%, 78.59% and 71.65% of Revenue from Operations respectively.
• In order to capitalize on the future demand, It is in process of setting up a new manufacturing plant in village Lasundra, Kheda district (Gujarat), in order to increase manufacturing capabilities. TThe total cost for setting up new manufacturing plant is estimated to be ₹ 27 crores. In order to finance the said project, we have been sanctioned a term loan of ₹ 20 crores from SIDBI.
• Kaka Industries Limited ntends to gradually shift existing manufacturing operations (phase-wise) from the existing three facilities to the aforementioned new facility in the future. The plant & machinery at the facility under expansion is targeted to be more automated to reduce human intervention and thus decreasing the scope of human error.
• There were search and seizure proceedings u/s 132 of the Income Tax Act, 1961 by the Income Tax Department on 24th October, 2018 on the residential and business premises of Promoters & Directors and settlement for the same is under progress after company undeclared income was reported.

• Company has created brands ito sellproducts under brand names i.e. Kaka, Poly Plast, Jinwin, Nice Plast and Barbarika.
• It has named competitors in the organized segment which includes Dhabriya Polywood Limited, Sintex Plastics Technology Limited and Fenesta Building Systems. (A division of DCM Shriram Limited).
• Its PE ratio is 11x (fy23 earnings) which looks reasonable.
• Further thee issue is priced at a P/BV of 1.94 based on its post-IPO NAV of Rs. 29.87 per share.
• I will apply in Kaka Industries IPO to the extent of funds available at my disposal.
• SME IPO in general are quite risky though this one looks relatively better placed to me. SME IPO due to bigger lot size for trading are also more illiquid.
• GMP as reported on social media has been steady or rising and may be Rs. 50/-.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.