One of the few engineering companies with a multinational presence, JK Files & Engineering Limited, has plans of coming out with a public issue. The company filed a draft red herring prospectus in connection with the IPO back in December 2021.
Due to a non-conducive market environment, the company had put its plans to go public on the back burner. However, the JK Files IPO may be revived in the upcoming financial year (FY2024). Going by the draft red herring prospectus, here’s what we know about the company and its public issue.
Incorporated in 1997, JK Files & Engineering Limited is involved in the manufacture, sale, and distribution of precision-engineered components such as steel files and drills that are used in tools and other hardware. The company also markets, sells and distributes hand tools, accessories for power tools, and power tool machines.
JK Files & Engineering, through its subsidiary RPAL, also manufactures, sells and distributes auto components, ring gears, water pump bearings and flexplates. According to a report by CRISIL, the company has around 25% to 27% of the global installed manufacturing capacity for steel files. JK Files & Engineering also accounted for around 10% to 12% of the global steel file sales volume in 2020.
In addition to India, the company also has a major presence in other Asian countries, Africa and Latin America.
JK Files & Engineering Limited, over the years, has been consistently recording profits. The key financial metrics of the company as listed on the prospectus are as follows.
(figures are in ₹ crores)
|As of June 30, 2021||FY21||FY20||FY19|
|Equity Share Capital||8.74||8.74||8.74||8.74|
|Profit After Tax||9.58||25.46||14||16.5|
|Diluted Earnings Per Share (EPS)||1.56||4.13||2.28||2.69|
|Return on Net Worth (RoNW)||8.55%||24.81%||17.85%||25.72%|
|Net Asset Value (NAV) per equity share||18.21||16.66||12.8||10.46|
Note: Diluted EPS and Net Asset Value (NAV) per equity share are in ₹.
The draft red herring prospectus filed by JK Files & Engineering Limited has listed the key strengths of the company. Let’s take a closer look.
Despite the many strengths, JK Files & Engineering Limited’s business is susceptible to a few risks. It is important to know what they are before investing in the JK Files IPO. Check out the key risks that the company faces.
As per the draft red herring prospectus filing made by JK Files & Engineering, the entire IPO issue of ₹800 crores is an Offer for Sale (OFS) from its promoter selling shareholder - Raymond Limited. The company isn’t planning to issue any new shares to the public for subscription.
A portion of the JK Files & Engineering Ltd IPO is reserved exclusively for the employees of the company and for shareholders of Raymond Limited. The number of shares reserved, however, hasn’t been disclosed by the company.
Furthermore, around 50% of the issue has been set aside for Qualified Institutional Buyers (QIBs) and 35% for retail investors. The balance 15% of the issue has been reserved exclusively for Non-Institutional Investors (NIIs).
All the proceeds from this upcoming issue of JK Files & Engineering would go to Raymond Limited. As per the DRHP, the objectives of the offer are -
The entire aim of the JK Files & Engineering Limited IPO is for its promoter entity Raymond Limited to execute a stake sale. Other than the benefit of listing, this public issue has no positive bearing on the issuing company whatsoever. This is something that you need to account for if you plan on investing in this IPO.
Now, another thing that you need to open a demat account is without having a Demat account you cannot invest in any upcoming IPOs or other market-linked securities. So, if you don’t have one already, head over to the website of Motilal Oswal. You can apply for a trading and Demat account through a completely paperless and digital process.