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  • Writer's pictureJatin Agarwal

PKH Ventures IPO


PKH Ventures Logo

Company and IPO Overview:


PKH Ventures Limited is a non-government company that is engaged in the business of construction and development, hospitality, and management services.


Incorporated in the year 2000 by visionary Mr. Pravin Agarwal, the company has established itself as a recognized player in the market by focusing on three distinct business verticals, namely Construction & Development, Hospitality, and Management Services.


Garuda Construction, its subsidiary and construction arm, handles the Civil Construction business.


Its Hospitality segment owns, manages, and operates hotels, restaurants, QSRs, spas, and sells food goods.


Its Management Services now offers a variety of mechanical, electrical, and plumbing ("MEP") work services, such as annual project maintenance and third-party O&M contracts. It has concluded the development of the Delhi Police Headquarters in April 2021, which involved the construction of twin towers of seventeen (17) storeys each, with a complete glass facade and steel bridge connecting the two towers. It is proposing to develop its own Forthcoming Development Projects, which include real estate development at Amritsar, Punjab; Food Park at Jalore, Rajasthan; cold storage park/facilities at Indore, Madhya Pradesh; and a wellness centre & resort at Chiplun, Maharashtra.


The company's achievements also extend to securing two significant government projects, namely the Hydro Power Project and the Nagpur Project. Under their hospitality vertical, PKH Ventures Limited has developed two hotels in Mumbai, namely Golden Chariot Hotel & Spa, Vasai and Golden Chariot.


Furthermore, the company manages a Boutique Hotel near Mumbai International Airport and has been operating a portfolio of 180 hotels since FY 2015.


As of 2021, PKH Ventures Limited constructed more than 1.5 million square feet in various private and government projects. In addition to this, the company is planning to construct its own residential and commercial projects in the upcoming years. At present under Management Services vertical, the company provides services for the annual maintenance of the Delhi Police Headquarters and runs restaurants under the names Golden Chariot, Hardy’s Burger, Casablanca, and many more.


PKH Ventures Limited is a new main board IPO coming just after Cyient DLM Limited IPO and it is going to raise around ₹ 379 crores via IPO that comprises fresh issue of ₹ 270.22 crores and Offer For Sale (OFS) up to ₹109.13 crores. The retail quota is 35%, QIB is 50%, and HNI is 15%. The price band of the issue is ₹ 140 to ₹ 148 with a minimum market lot of 100 shares.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

265

30.6

31/03/2022

245

40.5

31/12/2022

155

28.6


Objectives of the Issue:

The funds raised through the IPO will be allocated towards to fulfill the following objectives:


1. To facilitate the development of the Hydro Power Project, PKH Ventures Limited plans to invest in its subsidiary, Halaipani Hydro Project Private Limited.


2. Allocation of funds for the Garuda Construction project, primarily to meet long-term working capital requirements.


3. Allocation of funds for potential acquisitions and strategic initiatives.


IPO Details:

IPO Date

30/06/2023-04/07/2023

Face Value

₹5 per share

IPO Price Band

₹140-₹148 per share

IPO Lot Size

100 Shares

Listing at

NSE, BSE

Basis of Allotment

07/07/2023

Credit of Shares in Demat

11/07/2023

Listing Date

12/07/2023

Pre-Issue Shareholding

100%

Post-Issue Shareholding

68.84%

Retail Minimum Lot Size

100 shares (₹14,800)


Valuations & Margins:

Indicators

FY 20

FY 21

FY 22

EPS

2.35

5.06

6.33

P/E

-

-

22.12-23.38

EBITDA (%)

13.38

29.71

40.35

Debt/Equity

0.17

0.52

0.3

ROCE (%)

10.61

12.94

15.00


Important things to note about the Company:


Top reasons to consider the IPO:


1. In comparison to its competition, the company has a proven track record of over 20 years in hospitality management services, which is a fundamental strength in strategy creation.


2. The company has shown visible growth through the increase in orders over the year and by receiving robust government projects in both the construction and hospitality sector aggregating around 200 crores.


3. The company uses the asset-light model for its civil construction business, which means relying on third-party suppliers for equipment and labor at the construction locations. This strategy would significantly help in the reduction of fixed costs and increase the profit margins.


4. The Profit After Tax (PAT) margin has swollen to 19.5% in 6MFY22 from 2.6% in FY20. The ROCE has also improved over the last 2 years.


5. Moving forward, PKH Ventures Limited is also into the hotel management industry. Hence, if we look into the Indian Hotel and Tourism industry, it is one of the key drivers of growth in the service sector in India and is expected to show an annual growth rate (CAGR 2023-2027) of 8.29%, resulting in a projected market volume of US$10.53bn by 2027.


Risk factors to watch out in the IPO:


1. As the company has many government projects on the table currently, the execution may be delayed if it does not get the approvals of the various authorities in the government.


2. For the past three years, the company has had negative cash flows. If ignored, this could be a harbinger of long-term negative impacts on the company's financial health.


3. Its hydropower project is vulnerable to floods, cloudbursts, and landslides. This indicates that the project's success rate may be lower in the future.


4. Increase in the prices of construction materials and labour. The hotel operations incur fixed and recurring costs. Its inability to reduce such costs during periods of low demand could hurt the business.


5. 77% of the revenue came from the construction and development segment in the first six months of FY22, such slowdown in domestic travel and consumption could adversely affect the business over a period of time.



Crisp Insights:

  • Current Grey Market Premium is Rs.6.

  • This company is into many businesses and hence, market will find it confusing to value. Keep this one on radar and if there are no corporate governance issues in the company then post listing, once the price settles, this company can actually create good wealth as the businesses that they have taken up look profitable and also, these projects guarantee cashflow for the future.



Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.




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