The initial public offering (IPO) of Ceigall India continued to see a mixed response from the investors during the third and final day of the bidding process. The issue was overall subscribed 61 per cent at the end of Day 1 and managed to get a subscription of 1.23 times on the second day of the bidding.
The Ludhiana-based Ceigall India is selling its shares in the price band of Rs 380-401 apiece. Investors can apply for a minimum of 37 shares and its multiples thereafter. It is looking to raise Rs 1,252.66 crore via IPO, which includes a fresh share sale of Rs 684.25 crore and an offer-for-sale (OFS) of 14,174,840 equity shares.
According to the data, the investors made bids for 7,76,49,532 equity shares, or 3.48 times, compared to the 2,23,13,663 equity shares offered for the subscription by 1.10 pm on Monday, August 06. The three-day bidding for the issue, which kicked off on Wednesday, August 1, concludes today.
The allocation for non-institutional investors (NIIs) was subscribed 2.86 times, while the portion reserved for retail investors saw a subscription of 7.12 times. Portion for employees was booked 9.54 times. However, the quota set aside for qualified institutional bidders (QIBs) quota saw bids for 1.72 times.
Incorporated in 2002, Ceigall India is an infrastructure construction company with expertise in specialized structural projects, including elevated roads, flyovers, bridges, railway overpasses, tunnels, highways, expressways, and runways. The company completed over 34 road and highway projects as of July 2024.
The grey market premium of Ceigall India has taken a big hit, almost halved amid the rising volatility in the markets and muted bidding. Last heard, the company was commanding a premium of Rs 25 in the unofficial market, suggesting a listing pop of merely 5-6 per cent for the investors. However, the premium in the grey market stood around Rs 53 a day earlier.
Brokerage firms are mostly positive on the issue suggesting investors to subscribe to it for a long term citing its strong revenue growth, best in industry ROE, sound execution track record and plans to reduce debt as the key positives of the company, while stretched valuations and limited order book are the major concerns.
Ceigall India is an Infrastructure construction company where its business operations are broadly divided into EPC projects and hybrid annuity model projects. Its activities are spread across ten states in India, reflecting its diverse geographical presence. By diversifying its skill set and utilizing an efficient business model, CIL has successfully secured contracts, said Choice Broking.
"The valuation appears to be higher compared to the industry average. The company's strong order book and its potential to convert these orders into revenue appear promising. However, the increasing debt level is a concern, and thus, we recommend a 'subscribe with caution' rating for this issue," it added.
Ceigall India mobilised Rs 375.2 crore from anchor investors as it allotted 93.56 lakh shares at a Rs 401 apiece. For the financial year ended on March 31, 2024, Ceigall India reported a net profit of Rs 304.91 crore with a revenue of Rs 3,066.19 crore. The company net profit stood at Rs 167.70 crore with a revenue of Rs 2,087.04 crore for the financial year 2022-23.
Ceigall India has reserved shares worth Rs 2 crore for its eligible employees, who will get a discount of Rs 38 per share during the bidding. It has reserved 50 per cent of the net offer for the qualified institutional bidders, while retail investors will have 35 per cent of the net offering and remaining 15 per cent of the net offer will be allocated to non-institutional investors.
"We give a 'subcribe rating to the issue as the company provides high-quality infrastructure development services such as elevated roadways, flyovers, bridges, tunnels, highways, expressways, and runways. It is a preferred partner for NHAI projects and has recently worked with Delhi Metro on rail infrastructure developments," said Ajcon Global Services.
The company operates nine subsidiaries (five direct and four indirect) and eight joint ventures to execute projects. It is among the fastest growing engineering, procurement, and construction (EPC) corporations. It has an efficient business model and competent management team provide a healthy order book and long-term revenue visibility, Ajcon added.
IIFL Securities, ICICI Securities and JM Financial are the book running lead managers of the Ceigall India IPO, while Link Intime India is the registrar for the issue. Shares of the company are set to debut on both BSE and NSE tentatively on August 08, Thursday.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.