Khadim's India Ltd IPO..............Should you apply????

Hello Friends,

Another IPO of November. This time its Khadim’s India Ltd. More and more IPOs are coming up. Its been a while since we saw a footwear company coming in. Lets look into this one.



The IPO we are talking about today is Khadim’s India Ltd. Lets first look at the basics.
Particulars
Details
Company Name
Khadim’s India Ltd
Issue Open Date
2nd Nov 2017
Issue Closing Date
6th Nov 2017
Issue Price Band
Rs 745 to Rs 750
Issue Size
Rs 543.06 Crs
Shares per Lot
20 Shares



About the company!!!

The Company is one of the leading footwear brands in India, with a two-pronged focus on retail and distribution of footwear. It is the second largest footwear retailer in India in terms of number of exclusive retail stores operating under the Khadim’s brand, with the largest presence in East India and one of the top three players in South India, in fiscal 2016. It also had the largest footwear retail franchisee network in India in fiscal 2016.

The Company was incorporated in 1981, and through the next several years, they were involved in wholesaling and distribution of branded basic utility footwear, and they had forayed into the retail business in 1993.

Come let’s dive into this company to look at the fruits it might hold.

Utilization of Funds!!!

The issue is partly an OFS and partly a fresh issue.

1.       OFS of Rs 493.06 Crs which will go to the promoters and will not be received by the company.

2.       Fresh issue of Rs 50 Crs which is just a small part of the issue will be utilized for repaying its debts and working capital requirements.




So into the Financials now!!!!

1.       The company has increased its networth from Rs 103.65 Crs as on 31.03.2013 to Rs 192.26 Crs as on 30.06.2017.

2.       The company’s debts are pretty much less and manageable at Rs 15.59 Crs as on 30.06.2017. However the short term borrowings are pretty high at Rs 136.73 Crs.

3.       Good amount of money is invested in tangible assets at Rs 135.60 Crs as on 30.06.2017.

4.       The company is clearly struggling with working capital as the inventory as on 30.06.2017 stood at Rs 132.08 Crs and Debtors are at Rs 92.36 Crs which is more than its networth.

5.       The company’s total revenue was at Rs 625.55 Crs in the year 2016-17 and Rs 179.76 Crs in Q1 of 2017-18.

6.       Now looking into the profit of the company, it stands at Rs 30.76 Crs in 2016-17. Even in the 3 months of Q1 2017-18 the company has made a profit of Rs 7.10 Crs. This means that the company has a net profit ratio of around 5%, which is also the case in Bata India Ltd. However the company’s profits have been irregular and lacks consistency.

Valuations!!!

The company’s EPS for FY 2016-17 is Rs 17.78. At a MPS of Rs 750 the PE shall be 42.18. Now Bata trades at Rs 813 with a EPS of Rs 12.35. Which means the PE on Bata is 66. Looking at this Khadim’s really looks attractive.

So the verdict on this case!!!
Khadim's India Ltd looks promising and is a “Subscribe”.
Thank you very much for joining us.



-RicherInvestor


Written by Roger Vins Herman (CA, Mcom)



Disclosures:

The author or any person at RicherInvestor doesn't have any financial interest in the Company.

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