Company: IKF Technologies Ltd
Industry: IT and Bio Diesel
CMP and PE Ratio: Rs. 2.74 with a PE ratio of 66.99
Peer Companies for IKF: Southern Online Bio Technologies Ltd
Sales Mix for FY 08: 99.99% of the revenue for the company came from IT enabled services during the year ended 31st March FY 08.Bio Diesel Industry Outlook:
- Industry still at a very nascent stage in India. So enormous growth opportunities exist.
- High raw material cost is a big concern for the industry and margins for bio diesel companies are not expected to be great.
- Many big players like Reliance, Emami, Jain Irrigation, Tata Chemicals are already planning or making big time entry into this industry.
IKF – Financial Analysis:
- The company is still at a very early stage of its growth and hence it would not be fair to talk much on its financials as of now. The company has expanded its equity base significantly over the past few years for its expansion activities. The positive thing is that IKF is a debt free company.
- For the fiscal year ended 31st March 2008, revenue surged nearly 100%. But the operating cash flow for the company turned significantly negative.
- Being a small company, IKF might find it difficult to raise more funds in this scenario for any further expansion it might be looking at. This is a big challenge for the company.
Business Analysis:
- So far, the main revenue generator for IKF has been its IT and IT enabled services. The bio diesel initiative has not started to contribute to the company’s revenue as on 31st March 2008. In my opinion even the IT and ITES segment revenue for the company will be affected going forward owing to the current global crisis.
- While the company has talked a lot about its bio diesel initiatives in the past, nothing substantial has happened so far. In my opinion this initiative for the company might not be a great success. Moreover the company its small and just at its beginning it is trying to put its hands into too many things. This might not work out well for the company in the short term as well as in the long run.
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