Shares of Krystal Integrated Services surprised investors on March 21 after listing at a premium of 11 percent over the issue price. The debut topped analyst expectations of gains of around 4 percent.
"We remain positive towards the issue and recommend the market participants who have been allotted the share of the company to hold them for a medium to long-term perspective," Parth Shah, research analyst at StoxBox said.
Krystal Integrated Services provides management solutions, including housekeeping, sanitation, catering, private security, manned guarding, payroll processing, staffing, electrical, and plumbing.
The company's integrated facilities management services have positioned it as a preferred partner in government projects, which contribute over 70 percent to its revenue.
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Being a key solutions provider to the government sector, Krystal can execute large contracts, Shah said.
The overall outsourced integrated facility management market in India is expected to grow at a CAGR of 14.6 percent. The public administration, industrial, commercial offices, healthcare, educational institutions, railways, and metro, and airport sectors are expected to drive demand for the market, benefiting the company in the long run.
Also read: Krystal Integrated Services makes decent debut, lists at 11% premium to issue price
Narendra Solanki, head of fundamental research at Anand Rathi Shares, recommends avoiding the stock. Investors who got the share should exit their positions after listing, he said.
"Due to the intense competition and narrow profit margins in which the company operates, coupled with its heavy reliance on just two states for the majority of its business, there is a lack of visibility regarding long-term revenue prospects," he said.
The company has shown steady growth in profit and revenue over recent reporting periods. However, based on its earnings for the fiscal year ending 2024, the initial public offering (IPO) seemed fairly valued, Amit Goel, co-founder and chief global strategist at Pace 360 said.
Shivani Nyati, head of wealth, Swastika Investmart, advises investors to take advantage of the listing and book profits. Those who want to hold it, may keep a stop loss at around Rs 745.
"The positive listing signifies some investor confidence in Krystal's comprehensive service offerings, diverse customer base, and strong financial track record. Its decent listing offers a window of opportunity, but the associated risks necessitate a cautious approach," she added.
The Rs 300-crore public issue was subscribed 13.21 times. Of the funds raised, the company plans to spend Rs 100 crore to meet its working capital requirements. A sum of Rs 10 crore will be used to repay debt and purchase machinery. The remaining is for general corporate purposes.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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