Krystal Integrated Services Limited IPO - Get Date, Price, Review and Details

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In this article, we will discuss

• Introduction
• The Objectives of the Fresh Issue
• Key Strengths
• Risks
• Financial Snapshot

Introduction

Krystal Integrated Services Limited is one of India’s leading integrated facilities management services companies, with a focus on healthcare, education, public administration (state government entities, municipal bodies, and other government offices), airports, railways, metro infrastructure, and retail sectors. It provides a comprehensive range of integrated facility management service offerings across multiple sectors and is among select companies in India that have a wide geographic presence and customer base, catering to almost all end-user segments, as of March 31, 2023. Its range of service offerings includes soft services such as housekeeping, sanitation, landscaping, and gardening, hard services such as mechanical, electrical, and plumbing services, solid, liquid, and bio-medical waste management, pest control and façade cleaning and other services such as production support, warehouse management and airport management services (including multi-level parking and airport traffic management). It also provides staffing solutions and payroll management to its customers, as well as private security and manned guarding and catering services. It can integrate its service offerings that span across various sectors and require shared expertise and investment in terms of technology, equipment, and special manpower training. This enables it to provide a bundled solution of services to each customer that is tailored to its specific needs, caters to their requirements with relevant industry expertise, and acts as a one-stop integrated solution for customers who consequently do not need to engage with multiple vendors or service providers.

The Objectives of the Fresh Issue:

The company intends to utilize the net proceeds received towards the following objects:

• Repayment/prepayment of certain borrowings availed by the company.
• Funding capital expenditure for the purchase of new machinery
• Funding the working capital requirements of the company.
• General corporate purposes.

Key Strengths:

• The company’s wide portfolio of services enables it to deliver a mix of its service offerings and design a range of customized solutions suited to the specific needs of the customers, which bolsters customer acquisition and retention capabilities. Additionally, as the customers’ requirements grow or change, it can provide additional services to cater to their needs.
• Krystal’s focused business model is well-positioned to capture favorable industry dynamics. It has a track record of executing large contracts and is among select companies in India to qualify for and service large, multi-location government projects. For Fiscals 2021, 2022, and 2023 and six months ended September 30, 2023, the revenue from government contracts amounted to Rs. 3,271 million, Rs. 4,051 million, Rs. 5,213 million, and Rs. 3,444 million, respectively, aggregating to 69%, 73%, 74% and 76% of its revenue from operations.
• The company intends to strengthen operations across sectors by capitalizing on growing industry opportunities and adopting a sector-wise focus. Currently, they have been focusing on government customers, as well as healthcare, education, airports, railways, metro infrastructure, and manufacturing and industrial sectors to benefit from and capitalize on favorable industry dynamics.

Risks:

• Krystal’s revenue from operations is highly dependent upon a limited number of customers, with its largest, top 5, top 10, and top 20 customers contributing to 35%, 59%, 73%, and 86% respectively of its revenue from operations for Fiscal 2023. The loss of any one of its key customers, including top customers, for any reason could have an adverse effect on the business, results of operations, and financial condition of the company.
• A significant part of its revenue is generated from government contracts obtained through a competitive bidding process, which contributed almost 74% of its total revenue from operations for Fiscal 2023. There can be no assurance that it will qualify for, or it will successfully compete, and win such tenders, or maintain such customer relationships.
• Operational risks are inherent in the company’s business as it includes rendering services in diverse environments depending on customer requirements. A failure to manage such risks including any errors, defects, or disruption in its service or inability to meet expected or agreed service standards, could have an adverse impact on the business, cash flows, results of operations, and financial condition of the company.

Financial Snapshot