IPO: Kent RO Systems Receives Approval From SEBI; Financial Data Reveals Strong Profit Jump

Kent RO Systems, a water purifier company, has received approval from the Securities and Exchange Board of India (SEBI) to launch its initial public offering (IPO). While this marks an important milestone for the company, its financials tell a mixed story with some concerns.

Kent RO’s latest financial data reveals a strong profit jump in FY24, but this comes after a sharp fall in the previous fiscal (FY23). The company had posted a profit of Rs 166.5 crore for the year ended March 31, 2024, compared to Rs 97.1 crore in FY23.

While this is a big jump of around 71 per cent, it’s important to note that the profit had dropped by over 37 per cent in FY23 from Rs 154.2 crore in FY22. The company’s total expenses also rose by 6.42 per cent year-on-year (YoY), from Rs 976.9 crore in FY23 to Rs 1,039.6 crore in FY24.

According to the DRHP, the company reported revenue from operations of Rs 1,178.1 crore for the FY24, compared to Rs 1,084.3 crore in the previous financial year. This marks a growth of around 8.65 per cent YoY. Total income for FY24 stood at Rs 1,260.6 crore, up from Rs 1,109.1 crore in FY23 -- an increase of 13.65 per cent. Meanwhile, for the six-month period ending September 30, 2024, Kent RO reported revenue from operations at Rs 637.1 crore and total income at Rs 684 crore.

During the same period, the company recorded expenses of Rs 594.6 crore and a profit of Rs 69.6 crore, as per the DRHP paper. The IPO, which is a pure offer for sale (OFS), will see 10.1 million shares offloaded by promoters Sunita Gupta, Mahesh Gupta, and Varun Gupta.

Since it is not a fresh issue, the company itself will not receive any funds from this public offering. The draft paper was filed with SEBI on January 23, and the approval came on June 6.

The IPO price band has not been disclosed yet. JM Financial and Motilal Oswal Investment Advisors will act as the book-running lead managers, while KFin Technologies is the registrar to the issue.

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