1. At a Glance
A ₹1,200 crore SME stock mixing Make in India Defence dreams with dairy cream. Oh, and it grew profits 125% YoY while being nearly debt-free. We don’t know what’s hotter: their OPM or their optimism.
2. Introduction with Hook
If HAL is the BrahMos, then Krishna Defence is the desi jugaadu missile launcher made in a Gujarat garage—and it’s working just fine.
- 3-Year Profit CAGR: 107%
- FY25 EPS: ₹16 on a ₹884 stock
- Public shareholding jumped from 0% (2022) to 40% (2025) — must be doing something right?
The company started off building stuff for the Navy. Now it’s got its hooks into the Army and even your neighborhood dairy.
3. Business Model (WTF Do They Even Do?)
Krishna Defence is not just a defence contractor; it’s a triple threat:
- Defence & Security Segment: warship parts, naval platform support, Army utility structures
- Dairy Equipment: tanks, homogenizers, pasteurizers — yes, seriously
- Import Substitution R&D: makes things DRDO hasn’t finished developing
Clients include the Indian Navy, Army, and dozens of civil sector customers. Think of them as the “L&T of SMEs” — except they actually do diversified manufacturing.
4. Financials Overview
| FY | Revenue (₹ Cr) | EBITDA (₹ Cr) | Net Profit (₹ Cr) | OPM | PAT Margin | EPS (₹) |
|---|---|---|---|---|---|---|
| 2022 | 50 | 7 | 2 | 14% | 4% | 2.93 |
| 2023 | 63 | 9 | 5 | 14% | 7.9% | 4.63 |
| 2024 | 106 | 16 | 10 | 15% | 9.4% | 7.14 |
| 2025 | 195 | 30 | 22 | 16% | 11.2% | 16.00 |
Highlights:
- Sales up 3.9x in 3 years
- Profits up 10x
- OPM consistently around 15-16%
That’s not just a balance sheet; it’s a biceps sheet.
5. Valuation
Fair Value Range (FY26E basis):
| Metric | Estimate | Multiple | Valuation |
|---|---|---|---|
| EPS (FY26E) | ₹20 | 40x (Growth Defence) | ₹800 |
| EPS (FY26E) | ₹20 | 60x (High growth SME) | ₹1,200 |
Fair Value Range: ₹800–₹1,200
At CMP ₹884, you’re paying 55x trailing, but ~44x forward. Not cheap, but neither is defence manufacturing.
6. What’s Cooking – News, Triggers, Drama
- Warrants Converted (June 2025): 5.41 lakh warrants now equity shares
- Piyush Goyal Visit: Endorsed the Devanahalli facility under Make in India — brownie points unlocked
- FPO or Rights in future?: Capital raise hints lurking
- Dairy biz scale-up: Don’t laugh—margins here are fatter than buffaloes
7. Balance Sheet
| Item | FY25 (₹ Cr) |
|---|---|
| Equity Capital | 14.6 |
| Reserves | 117 |
| Total Borrowings | 9 |
| Total Assets | 163 |
Key Takeaways:
- Debt-light. Borrowings at just ₹9 Cr on ₹22 Cr PAT.
- Reserves grew from ₹11 Cr (2019) to ₹117 Cr (2025). That’s a 10-bagger just in credibility.
8. Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash Flow |
|---|---|---|---|---|
| 2023 | -7 | 1 | 6 | 0 |
| 2024 | -3 | -37 | 45 | 5 |
| 2025 | -11 | 5 | 2 | -5 |
- Negative Operating Cash Flow is a red flag.
- Heavy investments likely due to capacity build-outs.
- Funding via equity raises — not great, not terrible.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 24% |
| ROE | 18.5% |
| D/E | 0.06 |
| P/E | 55.2x |
| Price to Book | 9.23x |
| PAT Margin | 11.2% |
| Inventory Days | 270 |
| Debtor Days | 35.5 |
Conclusion:
Return ratios are hot. Valuation multiples? Even hotter. Inventory pile-up could become a landmine.
10. P&L Breakdown – Show Me the Money
| FY | Sales | EBITDA | EBITDA % | PAT | PAT % |
|---|---|---|---|---|---|
| 2023 | 63 | 9 | 14% | 5 | 7.9% |
| 2024 | 106 | 16 | 15% | 10 | 9.4% |
| 2025 | 195 | 30 | 16% | 22 | 11.2% |
This is what textbook compounding looks like when you actually deliver orders, not just shout about them in AGMs.
11. Peer Comparison
| Company | CMP | P/E | ROCE | OPM | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| HAL | ₹4,866 | 38.9 | 33.9% | 31% | ₹3,25,433 Cr |
| BEL | ₹409 | 56.2 | 39% | 28.7% | ₹2,99,189 Cr |
| Zen Tech | ₹1,858 | 59.8 | 36.7% | 38.4% | ₹16,777 Cr |
| Krishna Defence | ₹884 | 55.2 | 23.8% | 16% | ₹1,210 Cr |
For a sub-₹1,500 Cr company to be rubbing shoulders with HAL and Zen? That’s called punching above your artillery weight.
12. Miscellaneous – Shareholding, Promoters
| Category | Mar 2022 | Jun 2025 |
|---|---|---|
| Promoters | 100% | 59.96% |
| Public | 0% | 40.01% |
That’s some serious dilution. But dilution with delivery — we respect that.
Recent Developments:
- CRISIL rating upgraded (June 2025)
- New orders expected from dairy and defence ministries
- Multiple investor concalls + institutional meetings
13. EduInvesting Verdict™
Krishna Defence is your textbook “niche SME defence play” that’s built more on execution than hype. Sure, it looks expensive on P/E, but what price do you put on consistent earnings compounding and a Make-in-India growth engine?
Investors must note:
- Pros: Strong margins, consistent growth, almost debt-free
- Risks: Negative cash flows, equity dilution, high working capital cycle
- Bonus: You get exposure to two of India’s mega themes — Defence and Dairy. Not kidding.
Krishna may not win wars yet—but it’s winning investor trust. And in today’s SME market, that’s half the battle.
Metadata
Written by EduInvesting | July 13, 2025
Tags: Defence Manufacturing, SME IPO, Krishna Defence, High-Growth Stocks, Make in India, EduInvesting Premium
