IGI Logo

Empowering solutions

We initiate coverage on Krystal Integrated Services Ltd, a rising leader in the Integrated Facilities Management Services (IFMS) sector, with a TP of Rs. 1230, offering an upside of 62%. Krystal is the fastest-growing player in the IFMS industry, offering a diverse range of services, including IFMS, private security, staffing, and catering. With a revenue CAGR of 30% from FY21-24, Krystal surpasses its peers, driven by its ability to deliver bundled and customized solutions, supported by strong management. This impressive growth is further highlighted by a 50% EBITDA CAGR, reflecting the company’s operational strength. Krystal’s strategic focus on key sectors through government contracts, exceptional service portfolio and robust leadership, firmly positions it ahead of competitors, cementing its role as a dominant market player. Additionally, the company could explore opportunities in the B2C segment, leveraging its expertise and brand recognition for future growth.

* One-stop solution with diverse revenue streams:

Krystal Integrated Services Ltd is a one-stop solution provider, offering a wide range of services across sectors. Their offerings include IFMS with soft services like housekeeping, hard services like pest control and waste management, and specialized services such as production support and airport management. By integrating these services with advanced technology and specialized manpower, Krystal delivers tailored, bundled solutions, eliminating the need for clients to work with multiple vendors, by centralizing key functions to enhance efficiency, solidifying its position in the market.

* Client Base and Government Contracts increasing:

Krystal hasstrategically expanded its client base from 262 in FY21 to 369 in FY24 and has a 100% contract renewal/extension retention rate in FY24. Operating on a B2B model, Krystal focuses on high-quality government contracts, particularly in the health, education, waste management, and civil sectors, which contribute 77% of its revenue. The company excels in both public and private sectors, particularly in critical infrastructure projects like airports and railways. Krystal has positioned itself to capitalize on India's growing demand for facilities management and staffing services, ensuring sustained growth and a strong market presence.

* Outpacing peers and promising growth drivers:

Krystal stands out in the industry as the fastest-growing IFMS company, with a remarkable revenue CAGR of 30% from FY21 to FY24, far outpacing peers like SIS Ltd., UDS and Quess Corp whose growth rates range from 10% to 26%. Furthermore, Krystal's EBITDA CAGR of 50% during the same period underscores its operational efficiency and robust financial performance. Unlike its competitors, Krystal's diverse service offerings, including IFMS, private security, staffing, and catering, allow it to capture multiple revenue streams and maintain higher growth momentum, setting it up for continued market leadership.

* Valuation & Risks-

We expect a revenue CAGR of 23% over FY24-FY27E, driven by increase in both clients as well as an increase in government contracts. We expect EBITDA margins to expand by 110 basis points to 7.8% over the same period, driven by better operational efficiency, and EBITDA CAGR of 29.3% and a PAT CAGR of 34.7% over FY24-FY27E. At CMP, the stock is trading at 11.2x FY26E and 8.8x FY27E. We value the stock at 16x Q2FY27E EPS of Rs 76.8 and arrive at a target price of Rs1,230, an upside of 62%. We also dwell on the optionality of Krystal venturing into the B2C space, drawing a comparison with Urban Company.

Please refer disclaimer at https://www.mnclgroup.com/disclaimer

SEBI Registration Number : INZ000043833