Business Profile:
Kent is known for its water purifier and manufactured products for commercial and residential uses. The company is the first to introduce RO (Reverse Osmosis) technology in the water purifier industry which makes it a renowned brand in the market. Primarily business of Kent is to manufacture water purifiers and provide service for water purifiers. Apart from this company also built kitchen and home appliances like house fans under the “Kuhl” brand. Kent is a multinational company that operates in India and other nations.
IPO Objective:
As per the draft red hearing prospects, the IPO issue consists only of offer for sale. The OFS consists of up to 10,094,568 Equity Shares at the face value of ₨ 1 each aggregating up to XXXX. There is no fresh issue of shares by company and main objective of company for listing is to achieve benefits of listing shares like better liquidity for its existing shareholder in market.
IPO Details:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹1 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | Up to 10,094,568 Equity Shares |
| Aggregating up to ₹ XXXX million | |
| Fresh Issue | Up to XXXX Equity Shares |
| Aggregating up to ₹XXXX million | |
| Offer For Sale | Up to 10,094,568 Equity Shares |
| Aggregating up to ₹ XXXX million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not more than 50% of the Net Issue |
| Retail Shares Offered | Not more than 35% of the Net Issue |
| NII (HNI) Shares Offered | Not less than 15% of the Net Issue |
Issue Price & Size:
The issue price of Kent Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has an offer for sale of 10,094,568 equity shares at the price of ₨XXXX.
Launch Date:
The IPO opening date of Kent LTD. hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
Financial Statements:
| Particulars | September 30 , 2024 |
March 31 , 2024 |
March 31 , 2023 |
March 31 , 2022 |
| Income from continuing operations | ||||
| Revenue from operations | 6,371.88 | 11,781.85 | 10,843.93 | 10,473.67 |
| Other income | 468.29 | 824.76 | 247.51 | 383.05 |
| Total income | 6,840.17 | 12,606.61 | 11,091.44 | 10,856.72 |
| Expenses from continuing operations | ||||
| Cost of materials consumed | 2,342.89 | 4.015.07 | 3,656.89 | 3,402.41 |
| Purchases of stock - in - trade | 432.57 | 520.25 | 938.28 | 930.46 |
| Changes in inventories of finished goods , work - in - progress and stock - in - trade | ( 260.00 ) | 93.79 | ( 396.18 ) | ( 72.39 ) |
| Employee benefits expense | 859.51 | 1,711.56 | 1,731.83 | 1,555.89 |
| Finance costs | 5.68 | 8.85 | 9.04 | 9.58 |
| Depreciation and amortization expense | 228.49 | 425.79 | 410.78 | 309.83 |
| Other expenses | 2,337.65 | 3,621.16 | 3,419.28 | 2,649.21 |
| Total expenses | 5,946.79 | 10,396.47 | 9,769.92 | 8,784.99 |
| Profit before tax from continuing operations | 893.38 | 2,210.14 | 1,321.52 | 2,071.73 |
| Particulars | six months ended, Sept 2024 | 31-Mar-24 | 31-Mar-23 | 31-Mar-22 |
| Revenue from Operations | 6,371.88 | 11,781.85 | 10,843.93 | 10,473.67 |
| Revenue Growth ( YoY ) ( in % ) | - | 8.65 | 3.54 | - |
| Revenue from Operations by geography | ||||
| a . Revenues from India | 6,214.24 | 11,438.98 | 10,506.39 | 10,121.50 |
| b . Revenue Export | 157.64 | 342.87 | 337.54 | 352.17 |
| Revenue from Operations by Product Category | ||||
| a . Water Purifiers and water softeners | 5,368.05 | 10.124.16 | 9,406.71 | 9,099.83 |
| b . Kitchen and home appliances | 574.15 | 1,256.09 . | 1,192.69 | 1,275.64 |
| C. Fans | 403.24 | 307.14 | 112.00 | Nil |
| d . Others ( includes sale of scrap , export incentives , and other products ) |
26.44 | 94.46 | 132.53 | 98.20 |
| Revenue from Operations by Product Category as a % of Revenue from Operations ( in % ) | ||||
| a . Water Purifiers and water softeners | 84.25 | 85.93 | 86.75 | 86.88 |
| b . Kitchen and home appliances | 9.01 | 10.66 | 11.00 | 12.18 |
| c . Fans | 6.33 | 2.61 | 1.03 | Nil |
| d . Others ( includes sale of scrap , export incentives , and other products ) |
0.41 | 0.80 | 1.22 | 0.94 |
| EBITDA | 659.26 | 1,820.02 | 1,493.83 | 2.008.09 |
| EBITDA Margin ( in % ) | 10.35 | 15.45 | 13.78 | 19.17 |
| Profit for the period / year | 698.62 | 1,669.83 | 976.15 | 1,546.80 |
| PAT Margin ( in % ) | 10.21 | 13.25 | 8.80 | 14.25 |
| Return on Equity ( in % ) | 4.24 * | 9.95 | 6.46 | 10.67 |
| Advertisement and business promotion expenses as a percentage of revenue from operations ( in % ) |
20.23 | 13.16 | 13.25 | 11.33 |
Promoters & Shareholding:
As of date, there are three promoters of the company. The promoter along with promoter group in aggregate collectively holds 100% of the paid-up share capital of company.
| pre- offer | Post -Offer | |||
| Name | No. of Equity Shares |
shareholding ( % ) | No. of Equity Shares |
Shareholding ( % ) |
| Promoters | ||||
| Mahesh Gupta | 51,664,900 | 51.18 | [.] | [.] |
| Sunita Gupta | 36,968,010 | 36.62 | [.] | [.] |
| Varun Gupta | 12,084,270 | 11.97 | [.] | [.] |
| Mahesh Varun Private Family Trust |
1,000 | Negligible | [.] | [.] |
| Sunita Surbhi Private Family Trust |
1,000 | Negligible | [.] | [.] |
| Sunita Varun Private Family Trust |
1,000 | Negligible | [.] | [.] |
| Total ( A ) | 100,720,180 | 99.77 | [.] | [.] |
| Promoter Group | ||||
| S.S. Appliances Private Limited |
209,990 | 0.21 | [.] | [.] |
| Ridhima Gupta | 10,230 | 0.01 | [.] | [.] |
| Surbhi Gupta | 5,170 | 0.01 | [.] | [.] |
| Kent Appliances | 110 | Negligible | [.] | [.] |
| Total ( B ) | 225,500 | 0.23 | [.] | [.] |
| Total ( A + B ) | 100,945,680 | 100.00 | [.] | [.] |
Should You Subscribe to KENT RO SYSTEM Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths:
Large category products in RO market with highest share
Kent has a broader range of water purifiers in the market available in different price options with better quality. It allows the company to capture more customer base that doesn’t purchase premium quality products. The company continues focusing on innovation in water purifier systems to deliver quality products and have the highest share in the market.
New brands in market
The company that is dominant in the water purifier market is well known. Along with it, the company also manufactures home appliances and kitchen products, which makes the company more diverse and less risky. The company has shown its potential by improving the number of home and kitchen appliance products. In its diverse product list, the company includes water softeners, house fans, and kitchen appliances like mixers and juicers, etc.
In house manufacturing
The company has a mixed structure with in-house manufacturing of different products and outsourcing which enables the company to work with better quality. Kent-made products like sediment filters, RO membranes and carbon filters, etc which used in water purifiers as a main component.
Pan India reach and expanding international markets
Company working at the pan India level company has a multichannel network to ensure product availability in the market for customers. The company uses partnerships with retail dealers, door-to-door sales, and direct dealers in its distribution channel. Company products are also available in a quick commerce platform for urban area needs. The company has a presence in more than 30 countries including UAE, Nepal, Kuwait Bangladesh, etc.
Risk Factors:
Undiversified revenue
The company's main revenue comes from its water purifier’s products like water softeners which are around 85% which creates a risk dependency risk of one product segment, if in any quarter or year sales of water purifier’s fall it will create a drastic decrease in company revenue and profit margin. The company's inability to anticipate consumer demand adversely affects company revenue and profits.
Struggling in other businesses
The company struggles to compete in the market in front of established players in home appliance products because of a lack of operating history in this segment. No proven proper track record in this segment makes it difficult to operate in the market which obstructs the working efficiency of the company.
Man power dependency
The company business is mostly manpower dependent any disruption in the availability of manpower supply adversely affects company production which raises a serious risk for the company's future performance and operating ability. Primarily success of a business depends on maintaining good relations with the workforce necessary without it profit and cash flow affect negatively.
Need continuous innovation
Kent requires spending a part of its revenue on R&D for product innovation, which makes it difficult for the company to maintain good profit and creates a perpetual requirement for product improvement. If the company's research capability is insufficient to develop innovative products, it will adversely affect the company's operations and give advantages to its rivals in market.
Grey Market premium:
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the Kent RO System Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
