Krystal Integrated Services Limited- IPO Summary

About the Company:

Incorporated in December 2000, Krystal Integrated Services is one of India’s leading integrated facilities management services companies, with a focus on healthcare, education, public administration, airports, railways and metro infrastructure, and retail sectors. It specializes in providing facilities management services. Their offerings include housekeeping, sanitation, landscaping, gardening, mechanical, electrical, plumbing services, waste management, pest control, facade cleaning, along with additional services such as production support, warehouse management, and airport management. Krystal Integrated also provides staffing, payroll management, private security, manned guarding, and catering services.

As of 31 March 2023, Krystal Integrated Services Limited served 135 hospitals, 228 schools, 1 airport, 4 railway stations, and 30 metro stations, along with catering services on certain trains. The company expanded its clientele over the years, it served 262 customers in 2021, 277 in 2022, and 326 in 2023, indicating a growing demand for its services covering 16 states and two union territories in India.

Industry Overview:

The global outsourced Facility Management Market for CY2022 is valued at USD 890.00 billion and has recorded a CAGR of 2.1% from CY2018 – CY2022. Increasing investments in construction and infrastructural projects, growth in industrialization, development of smart buildings and penetration of digital solutions are expected to drive the demand for Facility Management services across the globe. The Asian Facility Management Market is the largest globally with a share of 33% of the total outsourced Facility Management Market in CY2022, with China and India being the main growth drivers.

The total Integrated Facility Management Market in India in FY2023 is valued at INR 1,937,058.86 million and around 50.6% of this is outsourced to 3rd party companies. Between FY2018 and FY2023, the outsourced Integrated Facility Management Market grew at a CAGR of 8.1%

Outsourcing of Facility Management Services is becoming a well-accepted concept in both the Commercial and the Residential segment. Within the Residential segment, high-rise residential complexes and premium villas/ homes in urban areas are more inclined to outsourcing. Recently, the market has witnessed increase in outsourcing of Facility Management from the government segment. The government sector has grown at a CAGR of 10.4% during FY2018 – FY2023, higher than the 6.0% recorded by the private sector during the same period.

Financials:

Company’s Revenue from Operation shows a growth of 22.54% CAGR from Rs.471.289 Cr in March 2021 to Rs.707.636 Cr in March 2023.

EBITDA margin was 6.39% in 2021, 8.22% in 2022 and 7.7% in 2023.

Net Profit Margin show a rising trend from 3.57% in 2021 to 5.43% in 2023.

Peer Comparison:

Key Risks:

1. The company’s revenue from operations is highly dependent upon a limited number of customers, with the largest customer contributing to 34.91% of total revenue from operations and top five, top ten, and top twenty customers contributing to 59.19%, 72.58%, and 85.86% respectively, of the revenue from operations for Fiscal 2023.

2. There are outstanding legal proceedings involving the Company, its Promoters, Subsidiaries, and Directors. Any adverse decision in such proceedings may render them liable to liabilities/penalties and may adversely affect the business, results of operations, cash flows, and reputation. Around Rs. 34 crores are involved in litigations against the Company.

Valuation:

Company’s P/E stands at 21.45. Industry P/E is 39.

Objectives of the Issue:

The Company proposes to utilize the Net Proceeds from the Fresh Issue towards funding the following:

1. Repayment/prepayment of certain borrowings 

 2. Funding working capital requirements of the Company 

 3. Funding capital expenditure for purchase of new machinery; and 

 4. General corporate purposes

IPO Details: