G R Infraprojects IPO to hit the market on 7 July. All you need to know4 min read . Updated: 02 Jul 2021, 11:55 AM IST
- GR Infraprojects' IPO will be an offer for sale of up to 11.5 million shares. There will not be any fresh issue of shares
GR Infraprojects' initial public offering (IPO) will open for subscription on 7 July, Wednesday. The public issue comprises an offer for sale (OFS) of up to 11.5 million shares by promoters and shareholders. There will not be any fresh issue of shares.
The offer will close on 9 July. The company has fixed the IPO price band at Rs828-837 per equity share.
HDFC Bank, ICICI Securities, Kotak Mahindra Capital, Motilal Oswal Investment Advisor, SBI Capital Markets, and Enquires Capital are the book lead running managers to the issue.
KFin Technologies will be the registrar to GR Infraprojects.
An OFS comprises 6.4 million shares by India Business Excellence Fund I, 3.2 million shares by India Business Excellence Fund, 1.1 million shares by Lokesh Builders, 4.9 lakh shares by Pradeep Kumar Agrawal, 1.3 million shares by Jasamrit Premises.
Vinod Kumar Agarwal, Ajendra Kumar Agarwal, Purshottam Agarwal, and Lokesh Builders are the company promoters.
Shares on offer
Up to 50% of the net offer will be reserved for qualified institutional buyers (QIBs), 15% of the portion for non-institutional investors (NIIs), and remaining 35% will be kept aside for the retail investors.
The IPO of GR Infraprojects includes a reservation of up to 2.3 lakh equity shares for subscription by eligible employees, according to the company’s red herring prospectus (RHP).
GR Infraprojects will not receive any proceeds from the offer since it involves only the OFS.
Objects of the issue
To achieve the share listing benefits on the BSE and the National Stock Exchnage.
To make an offer for sale of up to 11.5 million shares of face value of Rs5 per share, aggregating to ₹9.6 billion.
About GR Infraprojects
GR Infraprojects is an integrated road engineering, procurement, and construction (EPC) company. It has experience in design and construction of various road/highway projects across 15 states in India.
It has recently diversified into projects in the railway sector. It mainly undertakes civil construction projects under the EPC and build operate transfer (BOT) basis in the road sector.
It has also diversified into manufacturing of thermoplastic road-making paints, electric poles, road signages, and fabricating metal crash barriers.
The company was incorporated in December 1995 and have gradually increased their execution capabilities in terms of the size of projects they have bid for and executed.
The first road project executed by the company was for the public works department, Rajasthan in 1997 with a bid project cost of Rs26.5 million.
Expertise in road projects that is state and national highways, culverts, flyovers, airport runways, tunnels, etc.
Strong project execution capabilities.
Robust financial performance track record.
Experienced promoters and managers team.
Important details of the company
CRISIL upgraded long term rating to AA/Stable from AA-/Positive. They reaffirmed short term rating as A+ as on 20 October 2020.
As of March 2021, out of its BOT projects, the company have one operational road project which has been constructed and developed on a BOT (annuity) basis.
Also, it has 14 road projects which have been awarded under the hybrid annuity model (HAM).
Out of these, five projects are currently operational, four projects are under construction, and construction is yet to commence on five.
For the fiscal year 2020, the company reported a total income of Rs64.2 billion against ₹53.2 billion a year ago. Net profit for the period stood at ₹8 billion versus ₹7.1 billion in the same period last year.
As of December 2020, its total borrowings were at Rs42 billion, while its net worth was Rs37.3 billion. The total order book stood at Rs182.2 billion.
The average industry price to earnings P/E stands at 16.73 times.
The weighted average return on net worth for fiscals 2019, 2020, and 2021 is 26.2%.
The company has not paid any dividend on its equity shares during the last three fiscals.
The amount of future dividend payments, if any, will depend upon a number of factors, including future earnings, financial condition, cash flows, working capital requirements, contractual obligations, applicable Indian legal restrictions, and capital expenditures.
Comparison with listed peers
GR Infraprojects' listed peers include KNR Constructions, PNC Infratech, HG Infra Engineering, Dilip Buildcon, Ashoka Buildcon, IRB Infrastructure Developers, and Sadbhav Engineering.
Grey market premium of GR Infraprojects
GR Infraprojects shares are trading at a premium of ₹315 today in the grey market.
What's the ideal IPO strategy to follow?
The excitement surrounding the slew of IPOs in the coming months is huge. As many as five companies came out with their IPOs last month.
Investors are already euphoric on loss making companies such as Zomato and Paytm.
Smallcap analyst at Equitymaster, Richa Agarwal, said, investing in a company is like owning a piece of business. A loss-making business with no clear road to profits isn't one I would recommend. And certainly not at the time of its IPO.
You can read the entire editorial here: Paytm IPO: Will it Deliver Profits?
If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.
Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.
(This article is syndicated from Equitymaster.com)
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