Monarch Networth retains bullish outlook on Krystal Integrated Services, sees 66% upside

Domestic brokerage firm Monarch Networth Capital, in its latest note, reaffirmed its bullish view on Krystal Integrated Services, highlighting the company's robust expansion plans into new cities, potential deal wins in Integrated Facility Management Services (IFMS) and security services, and focus on high-growth sectors like airport and waste management.

According to the brokerage, Krystal is the fastest-growing IFMS company, poised to achieve a 30% revenue CAGR and 50% EBITDA CAGR from FY21-24 and surpass competitors with tailored, bundled services. Acting as a one-stop provider, Krystal offers services like IFMS, security, staffing, and catering, streamlining client operations.

With 77% of the revenue coming from government contracts and a 100% renewal rate in FY24, the brokerage believes Krystal is well-positioned to benefit from India’s infrastructure growth, bolstered by a strong private client base that includes HDFC Bank and Phoenix Mills.

Additionally, Krystal’s robust B2B foundation and potential entry into the B2C market present significant revenue growth opportunities.

66% upside on cards

The brokerage maintained its 'buy' rating on the stock with a target price of ₹1230 apiece, which indicates an upside potential of 66% for the stock from its latest closing price of ₹742.

The company debuted on the Indian secondary market in March, with a listing price of ₹713, just slightly below its IPO price of ₹715. After its listing, the stock experienced a significant increase of 29%, reaching a peak of ₹1,023.75 on April 12, 2024.

However, this upward momentum was short-lived as the stock entered a downward trend. The scrip is currently trading 27.5% below its record high. 

The brokerage forecasts a CAGR of 23% for revenue, 29.3% for EBITDA, and 34.8% for PAT from FY24 to FY27. This growth is expected to be driven by an expanding customer base, increasing government contracts, and higher renewal rates from existing clients.

Near-term triggers

The brokerage highlighted that Krystal is actively expanding into states like Delhi, Madhya Pradesh, Chennai, and Hyderabad, which will boost its revenue in the near term as it strengthens its pan-India presence.

Further, the company is in advanced discussions with several private companies, including a large multiplex chain, for contracts in IFMS and security services, adding significant private sector business.

The company is also enhancing its presence in high-growth sectors such as airport management and waste management, where demand for integrated services is rising due to government and private sector projects. Additionally, the brokerage stated that Krystal's prior success with Mumbai Metro Line 2 positions them as a strong contender for the Line 3 contract, presenting a significant growth opportunity for Krystal.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.