At a Glance
KHFM provides facility management, catering, guest house ops, gardening, pest control and more for government and PSU clients. It bagged ₹261 Cr in contracts recently (SBI, ONGC, BMC, Pondicherry University), but debtor days are now 112, promoter holding is down to 37%, and stock trades at 51x P/E. Something smells off — and it’s not the pantry.
1. 🎬 Intro: Low Promoter Holding, High Valuation
- ₹177 Cr market cap
- P/E: 51.5
- Book Value: ₹27 → P/B: 3.03x
- EPS: ₹1.59
- Dividend: 0.61% yield, but erratic
- Promoter Holding: Crashed from 71.2% → 37.0% in 3 years 😬
And yet, the company is bagging PSU contracts like Diwali sweets.
2. 🧽 WTF Do They Even Do?
KHFM is the janitor to the nation — literally.
Services:
- 🧹 Housekeeping & Building Maintenance
- 🛏️ Guest House Ops (Govt. bungalows? Maybe!)
- 🌻 Gardening & Landscaping
- 🐜 Pest Control (Yes, even that)
- ☕ Pantry & Catering (recently got ₹50+ Cr deals)
- 💼 Front Office Management
- 🏢 Property Management
Client base: PSU, BFSI, Municipal, University, Defence.
Core moat = long-term multi-crore government contracts.
3. 💰 Financials: Stable Sales, Flat Profits
Metric | FY23 | FY24 | FY25 |
---|---|---|---|
Revenue (₹ Cr) | 90 | 112 | 104 |
Net Profit (₹ Cr) | 3 | 3 | 3 |
OPM % | 10% | 9% | 10% |
ROE | 6.5% | 7.0% | 6.6% |
- Sales up 15% in FY24, but fell back 7% in FY25
- Profit has remained stuck at ₹3 Cr for 3 years straight — a plateau of pain
4. 📊 Valuation: Is ₹82 the Right Price?
- Market Cap: ₹177 Cr
- EPS (TTM): ₹1.59
- P/E: 51.5x
- EV/Sales: ~1.6x
- P/B: 3.03
🧮 Fair Value Range (10–20x EPS or 1x EV/Sales):
→ ₹30 – ₹60 is more sensible unless margins expand dramatically.
5. 📈 What’s Cooking?
📰 Order Bonanza:
- 🏦 ₹50.3 Cr: SBI + Pondicherry University (Apr 2025)
- 🏢 ₹11.89 Cr: ONGC & BMC (Dec 2024)
- 🧾 ₹261 Cr contracts confirmed in FY24
👨⚖️ Boardroom Moves:
- CFO & CS Rahul Pathak resigned in Feb 2024
- Multiple EGMs for preferential allotment + warrants
- Capital raised via convertible warrants
Still, Q4FY25 profit fell -12% QoQ, even with all this drama.
6. 💼 Balance Sheet – Leverage Under Control?
Metric | FY25 |
---|---|
Total Assets | ₹113 Cr |
Reserves | ₹37 Cr |
Equity | ₹22 Cr |
Borrowings | ₹39 Cr |
D/E Ratio | ~1.2x |
They repaid ₹9 Cr debt over 2 years — solid improvement.
But reserves still look small for a ₹100 Cr+ revenue company.
7. 💸 Cash Flow – Government Ka Paisa Late Aata Hai
FY | CFO (₹ Cr) | Comment |
---|---|---|
FY23 | -16 | Severe cash burn |
FY24 | 7 | Positive after order wins |
FY25 | -3 | Slipped again despite stable sales |
⚠️ Working Capital days = 249 😵
⚠️ Debtor Days = 112 → PSU clients taking their own sweet time.
8. 📉 Ratios – Stressy but Manageable
Ratio | Value |
---|---|
ROCE | 11.1% |
ROE | 6.55% |
OPM | 10% |
Interest Coverage | ~1.2x |
- ROCE just decent, not industry-beating
- ROE < 7% = weak returns
- Low ICR = risky if interest rates spike
9. 💵 P&L Breakdown
Metric | FY25 |
---|---|
Revenue | ₹104 Cr |
Operating Profit | ₹11 Cr |
Other Income | ₹1 Cr |
Interest | ₹6 Cr |
PBT | ₹5 Cr |
Net Profit | ₹3 Cr |
Basically, ₹1 Cr net profit per ₹35 Cr revenue — thin margins.
10. 📊 Peer Comparison
Company | P/E | OPM | ROE | Sales (₹ Cr) | Mcap (₹ Cr) |
---|---|---|---|---|---|
KHFM | 51.5 | 10% | 6.6% | 104 | ₹177 |
CMS Info | 22.9 | 26% | 17.7% | 2,425 | ₹8,525 |
NESCO | 22.3 | 60% | 15.2% | 732 | ₹8,384 |
Nirlon | 21.2 | 79% | 59.7% | 636 | ₹4,643 |
Verdict: KHFM trades at the highest P/E with the lowest ROE. PSU contracts don’t justify that kind of love.
11. 👨👩👦 Shareholding & Promoter Moves
Year | Promoter Holding |
---|---|
FY22 | 71.2% |
FY23 | 37.5% |
FY25 | 37.0% |
Public now holds 63% of the company.
No DIIs or FIIs in sight.
Promoters have issued warrants to themselves and others, diluting equity multiple times in FY24.
12. 📎 Miscellaneous Masala
- NSE SME listing → lower liquidity
- No proper investor communication since April 2025
- Preferential allotments, resignations, and EGM notices every few months = governance risk?
- Dividend paid in FY24, then skipped again in FY25. Thoda deti hoon, thoda nahin.
13. 🧑⚖️ EduInvesting Verdict™
KHFM is a low-margin service business with large PSU contracts and slow receivables.
Yes, order inflow looks strong. But high debtors, erratic cash flow, declining promoter holding, and a 51x P/E? That’s not a margin of safety — that’s margin of madness.
📉 Until debtor days fall below 60 and ROE rises above 12%, this story is all contracts, no compounding.
Fair Value Range = ₹30 – ₹60
✍️ Written by Prashant | 📅 08 July 2025
Tags: KHFM Hospitality, SME stocks, PSU contracts, facility management, stock analysis India, EduInvesting, smallcap services, ROE low, debtors high, dividend erratic