Khadim India IPO Opens Tomorrow: Should You Invest?
In terms of valuations, the pre-issue P/E ratio of Khadim India works out to be over 42 times its 2017 earnings, which is slightly lower compared to its peers such as Bata
NDTV Profit Team | Last Updated: November 01, 2017 14:28 (IST) NDTV Profit Team
EMAIL
COMMENTS
Khadim India IPO will open on November 2 and end on November 6
New Delhi: Khadim India is one of the largest footwear brands in India that focusses on retail and distribution of footwear. The company has exclusive retail stores operating under 'Khadims' brand. The company has the largest presence in East India and one of the top three players in South India, in fiscal 2016.
It has 853 branded exclusive retail stores in 23 states and one Union Territory. KIL has manufacturing facilities at Panpur and Kasba (in West Bengal) and 4 distribution centers across India. Further, it had a network of 357 distributors in fiscal 2017, in the distribution business vertical.
Khadim India IPO, that will open on November 2 and end on November 6, is a mix of offer for sale and fresh issue. The issue would constitute fresh issue worth Rs 50 crore and offer for sale worth Rs 493 crore (at upper band). The company will dilute 3.9% of its post-offer paid-up equity share capital.
Khadim India IPO Registrar
Khadim India IPO allotment status will be available on Link Intime's website
Khadim India shares allotment and listing
Finalization of Khadim India allotment will take place on November 10 and the shares will be listed on stock exchanges (BSE and NSE) on November 14.
Khadim India Financials
Khadim India's net sales for the 2016 and 2017 fiscal years hit Rs 535 crore and Rs 621 crore, respectively, and earned the net profits of Rs 25 crore and Rs 31 crore, respectively.
Khadim India IPO - What Brokerages Say
In terms of valuations, the pre-issue P/E works out to 42.2x FY 2017 earnings (at the upper end of the issue price band), which is slightly lower compared to its peers such as Bata. However, Bata has strong presence across India with well-established brand and its entire revenue comes from retail business.
On other hand, Khadim India's most of the revenue comes from Eastern India mainly from Kolkata and retail revenue is only 70% and balance comes from its distribution business. "Despite these positives factors and lower valuations compared to Bata, we however, believe that the current valuation for this company is fully factored in the price, which doesn't provide further upside for investors. Hence, we recommend neutral rating on the issue," says Angel Broking.
Risk Factors
If the company is able to successfully execute its competitive growth strategies, it will pose an upside risk. Higher than expected store addition and increase in new geographical reach could pose an upside risk for the company, says Angel Broking.
