Ceigall India's initial public offering (IPO) opens for bidding today, that is, Thursday, August 01 and the issue can be subscribed until Monday, August 05. The infra player is offering its shares in the range of Rs 380-401 apiece, where investors can bid for a minimum of 37 equity shares and its multiples thereafter.
Ceigall India, Incorporated in 2002, 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 Rs 1,252.66 crore-IPO of Ceigall India includes a fresh share sale of Rs 684.25 crore and offer-for-sale (OFS) of up to 1,41,74,840 equity shares by its promoters and existing shareholders. The proceeds from the fresh issue will be utilized to fund the purchase of equipment; repayment/prepayment of certain borrowings availed by the company and its subsidiary.
Ceigall India has 18 ongoing projects, including 13 EPC projects and five HAM projects. These involve elevated corridors, bridges, flyovers, rail over-bridges, tunnels, expressways, runways, metro projects, and multi-lane highways. The company has 1,488.17 lane kilometers of ongoing projects and has completed 2,158.72 lane kilometers of O&M projects, as of March 31, 2024.
Ceigall India mobilised Rs 375.2 crore from anchor investors as it allotted 93.56 lakh shares at a Rs 401 apiece. Anchor book included names like Nomura, Integrated Core Strategies(Asia), Societe Generale, Morgan Stanley Asia (Singapore) PTE and Citigroup Global Markets Mauritius along with various domestic mutual funds and insurance companies.
Ludhiana-based Ceigall India specializes in the construction, development, and execution of major multi-lane highway projects with specialized structures in various states of India, including Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Delhi, Maharashtra, and Bihar.
The company's order book stood at Rs 9,470.84 crore as of June 30, 2024. It has recently completed several key projects, including widening a road in Punjab, constructing the Kartarpur-Sahib Project, and finishing an elevated corridor portion for the Delhi-Saharanpur Project.
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.
The company 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.
ICICI Securities, IIFL 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. Here's what a host of brokerage firms said about the IPO Ceigall India:
Reliance Securities Rating: Subscribe Ceigall is one of the fastest growing EPC companies with 20 years experience, expertise in executing specialized structures projects of different sizes and involving varying degrees of complexity which has been the landmark projects for the company. It strategically bid for projects, leveraging its experience in roads and highways sectors to grow portfolio in other sectors, said Reliance Securities.
"It follows an asset light model, ensuring better fixed asset turnover ratios and strong relationships with lenders enables to raise timely financing at competitive terms whenever required. We believe Ceigall will continue to maximize revenues with multiple projects in hand and increase the profit margins and return ratio over the next few years," it said with a subscribe rating.
Swastika Investmart Rating: Subscribe with caution Ceigall's robust order book, efficient business model, and proven project execution capabilities position the company for continued growth. The company's consistent financial performance, marked by increasing top and bottom lines, further solidifies its position in the sector, said Swastika Investmart.
"However, significant contingent liabilities, dependence on government contracts, high working capital requirements, and intense competition present key challenges. The IPO is priced at a fully valued P/E of 20.7 times. While the company's growth prospects are promising, the aforementioned risks warrant a cautious approach," it said with a 'subscribe with caution' view.
Anand Rathi Research Rating: Subscribe for long term Ceigall India is among the fastest-growing EPC companies, based on a three-year CAGR in revenue as of fiscal year 2024. The company has a strong order book spread across various business sectors and geographical regions allowing them to pursue a wider range of project tenders, thereby maximizing their business volume and profit margins, said Anand Rathi Research.
"The company's P/E ratio is 22.9 times based on its FY24 earnings, with a market capitalization of Rs 6,985.4 crore after the issuance of equity shares and a market cap-to-sales ratio of 2.3 times its FY24 earnings. Looking at these factors we recommend 'subscribe for long term' rating to the IPO," it said.
Nirmal Bang Securities Rating: Subscribe Ceigall has shown strong track record of revenue, Ebitda and PAT growth in the past. Because of the company’s asset light model the company has been able to generate high ROCE and ROE as compared to industry average. The company’s debt-to-equity is reasonable at 0.7 timee and is expected to further reduce, said Nirmal Bang Securities' IPO note.
"The infrastructure industry in India is expected to grow for the foreseeable future given the central government’s continuous and consistent focus on capital expenditure and infrastructure. The P/E multiple for Ceigall at 22 times. The company trades at a premium to peers on the back of strong growth track record and higher ROCE," it said with a' subscribe' rating.
SBI Securities Rating: Subscribe with caution Ceigall is valued at FY24 P/E multiple of 23 times based on the post-issue capital on upper price band. Ceigall is one of the fastest growing EPC companies and has transitioned from a small construction company to an established EPC player over the last two decades. The company has one of the best return ratios among the listed peers, said SBI Securities.
"Looking at the consistently negative operating cash flows generated by the company, high debt levels and geographical concentration in the states of Punjab, Uttar Pradesh and J&K, the business model seems to be carrying relatively higher risk as compared to its listed peers. Due to this, the issue can be a slightly risky bet, it said with 'subscribe for long term' rating.
StoxBox Rating: Subscribe Ceigall India's financial performance is driven by its continued focus on road projects and specialized structures, ability to successfully bid and win new projects, efficient business model, consistent growth in order book and preferred partner for NHAI projects, said StoxBox in its IPO note.
"The company has recently joined hands with Delhi Metro for rail infra developments, which enables it to tap significant opportunities. The issue is valued at a P/E of 20.7 times on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a 'subscribe' rating for the issue," it said.
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