Jinkushal Industries IPO Opens For Subscription Today: Should You Bid? Read Anand Rathi's Report

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Anand Rathi Report

Jinkushal Industries Ltd.'s initial public offering will open for subscription on Sept. 25 and the offer closes on Sept. 29.

An exporters of non-OEM, new/customized and used/refurbished construction machines in global markets has fixed the price band between Rs 115 to Rs 121 per equity share. The face value of each share is Rs 10.

The Rs 116.10-crore IPO comprises of shares worth Rs 104.54 crore as fresh offer and Rs 11.61 crore as offer for sales.

Investors can place bids starting from a minimum of 120 shares and in multiples thereafter.

GYR Capital Advisors Pvt.Ltd. is the book-running lead managers for the public issue while Bigshare Services Pvt. Ltd. is the registrar to the offer.

Shares of Jinkushal Industries will list on both BSE Ltd. and National Stock Exchange Ltd.

Objects of the Issue

• Repayment of certain borrowings availed by the company.

• Funding working capital requirements and general corporate purpose

Strengths:

• Largest player in export of Non-OEM construction equipment in addition to presence in UAE and USA through their Subsidiaries.

• Refurbishment, reuse, and contribution to circular economy along with environmental responsibility.

• Diversified Market Presence and Optimized Machines Solutions.

• Supply Chain Efficiency.

• Launch and Expansion of HexL brand machines.

Key Strategies:

• Further Integration and Diversification.

• Sales Volume Growth.

• Efficiency Enhancement and Cost Optimization.

• Expansion of Product portfolio.

• Working Capital Optimization.

Valuation:

Jinkushal Industries is among the largest exporters of non-OEM construction equipment, with an international presence in the UAE and USA through its subsidiaries.

The company is committed to refurbishment, reuse, and promoting the circular economy, reflecting its focus on sustainability and environmental responsibility. With a diversified market base and optimized machine solutions, it delivers value to customers across geographies.

The launch of its proprietary brand HexL marks a strategic shift from selling other brands’ products to building a productdriven, customer-centric business model.

At the upper price band company is valuing at P/E of 30.1x to its FY25 earnings, with EV/Ebitda of 22.0x and market cap of Rs 4,644 million post issue of equity shares.

We believe that the IPO is fully priced and recommend a “Subscribe-Long Term” rating to the IPO.

Key Risk:

• Company is heavily dependent on the export market and derive the majority of revenue from the export trading of construction machines. High dependency on export revenues exposes them to regulatory uncertainty, geopolitical risks, tariff & non-tariff barriers and trade policy volatility.

• Revenue from operations is dependent upon a limited number of customers and the loss of any of these customers or loss of revenue from any of these customers could have a material adverse effect on their business, financial condition, results of operations and cash flows.

• A significant portion of revenue is derived from select geographies such as Mexico and UAE. Any adverse developments in this market could adversely affect their business.

• Company have significant working capital requirements and their inability to meet such working capital requirements may have an adverse effect on results of operations.

• Company is dependent on third-party suppliers and any disruptions in the supply or an increase in the prices of requisite construction machines could adversely affect their operations.

• Company is dependent on third party transportation providers for the delivery of their machines and any disruption in their operations or a decrease in the quality of their services could affect their company's reputation and results of operations.

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