Ceigall India IPO: Issue booked 13.75 times on the last bidding day led by QIBs; check GMP, subscription status

Ceigall India IPO subscription status: Despite the market being in the red, Ceigall India Limited's initial public offering was subscribed 13.75 times on the last day of bidding.

According to BSE, the offering attracted bids of 30,67,62,708 shares against the 2,23,13,663 equity shares that were offered, with a price range of ₹380–401.

The second day of the infrastructure company Ceigall India Ltd.'s initial public offering (IPO) proceeded very smoothly, with every segment being completely booked. Ceigall India IPO subscription status was subscribed 1.23 times, as per BSE data.

Retail investors' quota was subscribed 1.65 times, while the portion for non-institutional investors was subscribed 1.75 times. There were 5.47 times subscriptions for the employee component, while 1% of the amount is reserved for qualified institutional buyers (QIBs).

According to BSE data, 61% of subscribers to the Ceigall India IPO were active on the first day of bidding.

One day prior to the public subscription period for its inaugural share-sale, the company said on Wednesday that it had secured ₹375 crore from anchor investors. The price range for the initial public offering is ₹380 to ₹401 per share. Subscriptions for the IPO opened today, Thursday, August 1, and will run through Monday, August 5.

Having been established in 2002, Ceigall India is a construction business that specialises in building specialised infrastructure, including flyovers, elevated roadways, bridges, railroad overpasses, tunnels, highways, expressways, and runways.

The business had ₹9,470 crore in its order book as of June 2024. Public sector organisations including Military Engineer Services, Indian Railway Construction International Ltd., and Bihar State Road Development Corporation Ltd. are among its clients.

From ₹2,068.17 crore in fiscal 2023 to ₹3,029.35 crore in fiscal 2024, the company's operating revenue increased by 46.5%, and its profit after taxes increased to ₹304.3 crore from ₹167.27 crore.

Ceigall India IPO Review

Indsec Securities

As to the brokerage, Ceigall India is a corporation that specialises in civil construction of roads, highways, flyovers, bridges, railroad overpasses, tunnels, expressways, and runways. The compound annual growth rate (CAGR) for revenue, EBITDA, and APAT for FY22–24 is 63.5%, 66.9%, and 55.5%, respectively. They command a ROE of 32.6 and a ROCE of 33.6% in FY24. Book to bill, which provides revenue visibility, is more than three years old, which is longer than that of rivals in the sector.

The company's strong order book, sizable NHAI tendering pipeline, and diversification plan into other infrastructure businesses are its main development drivers. Additionally, the revenues from the new issuance would mostly go toward paying off debt.

“We draw confidence from its improving return ratios, strengthening balance sheet (post debt repayment) and strong order book. We therefore assign a “Subscribe” rating to the IPO,” the brokerage said.

Nirmal Bang

The brokerage claims that the business has a solid history of sales, EBITDA, and PAT growth. The company's asset-light business model has allowed it to produce higher ROCE and ROE than the industry average. At 0.7x, the company's debt-to-equity ratio is manageable, and it should continue to decline as a result of certain borrowings that were repaid with money from the IPO. India's infrastructure sector is anticipated to expand in the near future due to the federal government's persistent emphasis on infrastructure and capital spending.

“The P/E multiple for Ceigall at 22x is at a premium to industry average of 18x. The company deserves to trade at a premium to peers on the back of strong growth track record and higher ROCE. We believe Ceigall will sustain its premium valuations and thus recommend a ‘SUBSCRIBE’ to the issue,” the brokerage said.

Ceigall India IPO details

The IPO consists of an offer-for-sale (OFS) of 1,41,74,840 equity shares by existing shareholders, including promoters, and a fresh issue of equity shares for ₹684.3 crore by the firm.

The selling shareholders in the OFS include promoters Ramneek Sehgal, Ramneek Sehgal and Sons HUF, Avneet Luthra, Mohinder Pal Singh Sehgal, Parmjit Sehgal, and Simran Sehgal.

The company intends to use the net proceeds to finance the following goals: general corporate purposes; equipment purchases; full or partial repayment or prepayment of certain loans taken out by the company; and Ceigall Infra Projects Private Limited, the company's subsidiary.

The registrar for the Ceigall India IPO is Link Intime India Private Ltd, while the book running lead managers are ICICI Securities Ltd, IIFL Securities Ltd, and JM Financial Ltd.

Ceigall India IPO GMP today

Ceigall India IPO GMP today or grey market premium is +53. This indicates Ceigall India share price were trading at a premium of ₹53 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Ceigall India share price was indicated at ₹454 apiece, which is 13.22% higher than the IPO price of ₹401.

According to grey market activity over the previous ten sessions, the IPO GMP is heading towards lower listing. Analysts at investorgain.com estimate that the lowest GMP is ₹0 and the maximum GMP is ₹140.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.