Kaka Industries Limited IPO - Review, Valuation, Peer Comparison and GMP

Kaka Industries Limited - Complete Overview

Kaka Industries Limited, established in 2019, specializes in the PVC profile brand, with a primary focus on manufacturing polymer-based profiles used in doors, windows, partitions, false ceilings, wall panelling, kitchen cabinets, and other interior and exterior works. 

The company offers a wide range of products, encompassing 1200 SKUs, including PVC profiles, uPVC door and window profiles, WPC profiles and sheets, in various sizes, specifications, and colors. Additionally, the company is engaged in the fabrication of factory-made PVC and solid PVC doors also.

To market its products, the company utilizes an extensive network of 300 dealers spread across over 20 states and union territories in India. Their distribution network includes three depots located in Gagilapur (Telangana), Dadri (Uttar Pradesh), and Surat (Gujarat). 

The company sells its products under different brand names, namely Kaka, Poly Plast, Jinwin, Nice Plast, and Barbarika. Furthermore, it has three manufacturing units situated in the village of Zak, Gandhinagar district, and Gujarat.

The company has a combined installed capacity of 15,425 MT for PVC profile manufacturing, 2,995 MT for WPC profile and sheet manufacturing, and 2,022 MT for uPVC door and window profile manufacturing.

To expand its manufacturing facilities, the entity is in the process of setting up a new manufacturing plant in the village of Lasundra, Kheda district, Gujarat. 

The majority of the company's revenue is derived from the state of Gujarat (63.73%), followed by Telangana (8.67%), Maharashtra (7.49%), Karnataka (4.61%), and the remaining 15.50% from other 19 states and union territories.

 

What does the company do? 

The company specializes in the production of PVC profiles, which primarily focuses on manufacturing polymer-based profiles used in various applications such as doors, windows, partitions, false ceilings, wall panelling, kitchen cabinets, and other interior and exterior works.

 

 

Company Products

The company offers a range of products, which encompass PVC Doors, PVC kitchen cabinets and furniture, UPVC window profiles, and WPC materials. 

 

IPO Overview

The upcoming IPO of Kaka Industries Limited is an SME IPO and is scheduled to be listed on the BSE SME. The IPO date is 10th July 2023 to 12th July 2023.

The Kaka Industries share price is set between Rs. 55 to Rs. 58 per share, with a face value of Rs 10. The listing of the share on the BSE SME is expected to occur on 20th July 2023. 

1 lot of the share consists of 2000 shares and retail investors can bid for a maximum of 1 lot. The total issue size of the shares is 3,660,000 shares, amounting to Rs. 21.23 Crores. The company has strategically allocated shares among different investors.

 

Kaka Industries Limited IPO timetable

EVENTS	DATE
IPO Opening Date	10 JULY 2023
IPO Closing Date	12 JULY 2023
IPO Allotment Date	17 JULY 2023
Refund initiation	18 JULY 2023
IPO Listing Date	20 JULY 2023

 

Kaka Industries Limited IPO Details

IPO Opening & Closing Date	10 July 2023 to 12 July 2023
Face Value	Rs. 10 per share
Issue Price	Rs. 55 to Rs. 58 Per share
Lot Size	2000 Shares
Price of 1 Lot	Rs 116,000
Issue Size	3,660,000 Shares  (aggregating up to Rs. 21.23 Cr)
Offer for Sale	NA
Fresh Issue	3,660,000 Shares  (aggregating up to Rs. [.] Cr)
Listing at	BSE SME
Issue Type	Book Built Issue IPO
Registrar	Bigshare Services Pvt. Ltd.

 

Kaka Industries Limited IPO Lot Details

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	1 Lot
Minimum Lot Investment (HNI)	2 Lot

 

Kaka Industries Limited IPO Reservation

Market Maker Portion	1,92,000 (4.98%)
Institution Portion	1,732,000 (44.96%)
Non-institution Portion	522,000 (13.55%)
Retail Portion	1,214,000 (31.52%)

 

Company Financial

Amount in Lakhs

Period	FY 21	FY 22	FY 23
Total Assets	3568.02	4614.76	6767.00
Total Revenue	7879.00	11709.98	15887.70
Net Profit	302.51	497.66	718.50
Net Worth	743.65	1241.31	1956.88
Reserve & Surplus	493.65	991.31	956.88
Total Borrowings	1999.00	2735.55	4013.66

 

Revenue generated from top 10 customers

 

Product Wise Revenue Bifurcation of the Company

Amount in Lakhs

Particulars	% of Revenue
PVC Profile	62.71%
WPC Profile & Sheet	18.22%
uPVC Door and Window Profile	7.78%
Factory made doors	2.58%
Raw Material (Chemicals, Resin and other items)	8.71%
Total	100.00%

 

Objective of the Issue

The company aims to utilize the funds for the following objectives:

• Meeting working capital requirements.

• Repayment and/or pre-payment, either in full or partially, of certain borrowings obtained by the company.

• General corporate purposes.

 

Promoters and Management of Kaka Industries Limited

The company benefits from the support of experienced promoters. The main promoters of the company including Mr Rajesh Dhirubhai Gondaliya, aged 50 years, serve as the Chairman and Managing Director, while Mr Bhavin Rajeshbhai Gondaliya, aged 23 years, holds the position of Whole-time Director.

Pre-issue Promoters Holding	95.32%
Post-issue Promoters Holding	69.78%

 

Peer Comparison

The company operates in a competitive industry and faces competition from both well-established and emerging players. As per the Kaka Industry Ltd DRHP, the company's primary competitors include the following.

Company Name	EPS (Basic)	PE	Total Income (Rs in lakhs)
Kaka Industries Limited	4.98	4.98	11,709.98
Dhabriya Polywood Limited	4.70	33.91	13,395.01
Sintex Plastics Technology Limited	(6.73)	-	94,652.00

 

IPO's Valuations

The Kaka Industries Ltd IPO is priced at a range of Rs. 55 to Rs. 58 per share, with a face value of Rs 10. The IPO valuation of the company has been decided on the basis of an EPS of Rs 7.19, a RoNW of 36.72%, an ROE of 44.93%, a ROCE of 20.83%, and a NAV of 19.57.

 

Dividend Policy

The company has not distributed dividends for the past three financial years and does not have a formal dividend policy in place. However, dividend payments will be made based on the recommendation of the board of directors, considering various factors such as operational results, earnings, future expansion plans, capital requirements, surplus, general financial condition, and more.

 

IPO's Strengths

• Widespread network of dealers that covers significant areas across India.
• A stringent quality control mechanism is implemented by the company.
• Young and experienced management teams.
• In-house manufacturing capabilities.

 

IPO Weaknesses

• Limited operating and financial history, making it challenging to accurately evaluate future growth.
• Operate in a price-sensitive industry.
• Operate in a highly competitive industry.
• Need specific approvals, licenses, registrations, and permits to conduct the business.
• Currently involved in legal proceedings against the company's promoters and directors.
• Depend heavily on a few customers for a significant portion of their revenues.

 

 

IPO GMP

The Current GMP of this IPO is Rs. 48.

 

Conclusion

Kaka Industries Limited IPO is a highly competitive and fragmented segment. Nonetheless, the company has demonstrated decent financial performance, and the issue price appears reasonable. Potential investors are advised to thoroughly analyze all factors before considering an application for this IPO.

 

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To Read the Prospectus of the Company Click Here to Download the DRHP

 

 

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