Shree Karni Fabcom IPO (NSE SME) Overview

Surat based Shree Karni Fancom Limited produces customized knitted and woven fabrics for industries such as luggage, medical arch support, chairs, shoes, and apparel. Shree Karni Fabcom IPO is all set to raise Rs 42.49 crores. The issue is entirely a fresh issue of 18.72 lakh shares

IPO opensMar 06, 2024
IPO ClosesMar 11, 2024
IPO Size (Rs.)₹42.49 Cr
IPO Size (shares)1,872,000 shares
BreakupFresh issue only
Face Value:₹ 10
IPO Price in Rs :₹220 to ₹227 per share
Minimum Lot600 Shares
Listing AtNSE SME
QIB ~50 % (less anchor)
NII Quota~15%
Retail Quota~35%
 Lead ManagerHorizon Management Private Limited
RegistrarMas Services
Market makerMLB Stock Broking
.

About Shree Karni Fabcom Limited:

  • They are engaged in the business of manufacturing of Technical Textile for the luggage, medical arch support, chairs, shoes and apparels industry
  • They specialize in Woven Fabrics, Knitted Fabrics, Coated Fabrics, 100% polyester and recycled polyester fabric.
  • They procure yarn, resin, acrylic and coating chemicals to manufacture specialized technical textile and sell them to various luggage, medical arch support, chairs, shoes and apparels manufacturers and other textile intermediaries.
  • The fabric manufactured by them also has diverse applications for luggage, roofing, agriculture net, vehicle covers, tents, armed forces fabric, sports-kits, chairs, medical arch support, umbrella and rain coats amongst others.
  • The manufacturing unit is equipped with automated machines for manufacturing of specialized technical textile with installed capacity of 70,000 meters per day for weaving, 90,000 kilos per month for knitting, 50,000 meters per day for poly acrylic and polyurethane coating, 15,000 meters per day for PVC / 8,000 meters per day for EVA lamination and 40,000 meters per day heat embossing.
  • They market and sell under the brand ‘SKFL’.

Financials: Shree Karni Fabcom Limited

Particulars / Rs. Lac30-Nov-23202320222021
Revenue from operations7,572.2212,694.658,357.363,287.42
Profit after Tax813.83555.25514.84153.48
Share Capital520100100100
Net Worth1,912.172,602.241,321.61671.23
Earnings per Share23.80^11.10^51.48*15.35*
Net Asset Value36.77260.22132.1667.12
Total borrowings9,504.273,658.722,718.091,451.30
Post issue Share Capital707.2   
FV10.0   
IPO price227.0   
EPS Fy237.9   
PE Fy2328.9   
EPS Fy24 (annualized)17.3   
PE Fy24  (annualized)13.2   
Market cap in Lacs16,053.4   
Market cap / Sales1.26   

Anchors: Shree Karni Fabcom IPO

Shree Karni Fabcom IPO: Salient Points

  • In addition to existing manufacturing unit, they are in the process of setting up two additional manufacturing units for dyeing of fabrics (“Dyeing Unit”) which shall be located at Navsari District, Surat, Gujarat and for manufacturing bags (“Bag Unit”), which shall be located at Palsana, Surat.
  • The Net Proceeds are proposed to be utilized for setting up the above mentioned dyeing unit and purchase of a new backpack manufacturing unit at Surat in Gujarat. Funds will also be allocated to meet working capital requirements and general corporate expenses.
  • Revenue bifurcation based on type customers for the last 3 financial years
Particulars20-21%21-22%22-23%30-11- 2023%
Soft and Hard Luggage1,369.8741.67%3,458.9241.39%5,629.3444.34%3,434.0045.35%
Back Packs1,290.9739.27%3,388.7140.55%4,994.0339.34%2,751.7436.34%
Shoes, chairs & medical arch support626.5819.06%1,509.7318.06%2,071.2816.32%1,386.4718.31%
Total3,287.42100.00%8,357.36100.00%12,694.65100.00%7,572.22100.00%
  • Key Performance Indicators of Company:
Performance IndicatorsNovember 30, 2023March 31, 2023March 31, 2022March 31, 2021
Revenue from Operations7,572.2212,694.658,357.363,287.42
EBITDA1,440.271,519.16828.14380.51
EBITDA Margin19.02%11.97%9.91%11.57%
Profit  After  Tax  813.83555.25514.84153.48
PAT Margin10.75%4.37%6.16%4.67%
ROE42.56%21.34%38.96%22.87%
ROCE11.34%21.83%19.20%16.80%
Net Debt/ EBITDA6.522.383.273.68
  • CAGR for the period from eight months period ended 30th November 2023 to 2021.
    • Revenues CAGR of 56.89%.
    • EBITDA CAGR of 58.64 %
    • Profit after tax CAGR of 53.51%
  • Peers: None
  • They enjoy the benefits of incentives under the “Technology Upgradation Fund Scheme” (TUFS) and “Amended Technology Upgradation Fund Scheme” (“ATUFS”) provided by the Central Government of India and “Gujarat Textile Policy, 2012” (the “Policy”) by the State Government of Gujarat. An interest subsidy of 6% on the loans availed by them which is provided under both TUFS and the Policy.
  • The putting up the dyeing unit will be the last leg step of investment towards complete integration of operations and this will improve the cost competitiveness of the company and open up an opportunity to tap the global markets. 75% of the funds being raised are going for backward integration.
  • The company supplies specialized textiles to leading brands and luggage manufacturers such as Samsonite, VIP, Hindesign, Safari, Bata, Tommy Hilfiger, Dell, Swiss Military and Khadim.
  • Shree Karni Fabcom IPO is coming at a PE ratio of 17x (fy23 earnings) and 13x (Fy24 annualized earning)
  • I intend to apply in Shree Karni Fabcom IPO subject to availability of funds. They are supplier of technical textiles and cater to big names in the soft luggage industry. Valuations look reasonable and company could show a good growth trajectory.
  • GMP as reported on social media has been Rs. 300.
  • Horizon Management Private Limited is the lead book running manager. The few IPOs lead managed by them have listed in minus on the listing day. These include names like Baba Food Processing India Limited, Cosmic CRF Limited.
  • SME IPO are much more risky and volatile than mainboard IPOs.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management. I have in the past cleared 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.

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