Interarch Building Products IPO opens today: Should you subscribe?

The initial public offering (IPO) of Interarch Building Products kicks-off for bidding on Monday, August 19. The company holds its shares in the fixed price band of Rs 850-900 per share, where the investors can bid for a minimum of 16 equity shares and its multiples thereafter. The issue will close for the bidding on Wednesday, August 21.
 

Incorporated in 1983, Interarch Building Products is a leading provider of turnkey pre-engineered steel construction solutions in India. The company offers integrated facilities for design, engineering, manufacturing, and on-site project management for the installation and erection of pre-engineered steel buildings (PEB).
 

The Rs 600.29 crore IPO of Interarch Building Products company includes a fresh share sale of Rs 200 crore and an offer-for-sale (OFS) of up to 44,47,630 equity shares by its promoters and existing shareholders worth Rs 400.29 crore
 

The net proceeds from the issue shall be utilized towards financing the capital expenditure of a new PEB manufacturing unit, upgradation of existing manufacturing facilities, funding investment in IT assets, funding incremental working capital requirements; and general corporate purposes.
 

Ahead of its IPO, Interarch Building Products issued 19,94,288 shares at Rs 900 apiece to raise Rs 179.5 crore through its anchor book wherein Whiteoak Capital, Mirae Asset, Pinebridge Global Funds, LC Pharos Multi Strategy Fund, ICICI Prudential Mutual Fund Eastspring Investments India Infrastructure and others participated.
 

Interarch Buildings had the second-highest total installed capacity of 141,000 metric tonnes per year as of March 31, 2023. It held a 6.1 per cent market share in operating income among integrated PEB players in India in FY23. The company offers PEBs through pre-engineered steel building contracts and the sale of pre-engineered steel building materials.
 

Interarch Building's industrial/manufacturing construction category customers include Grasim Industries, Berger Paints India, Blue Star Climatech, Timken India, and Addverb Technologies. The company serves InstaKart Services in the infrastructure construction category.
 

The company has four manufacturing facilities out of which two are situated in Sriperumbudur, Tamil Nadu; one in Pantnagar, Uttarakhand and one in Kichha, Uttarakhand, India. It has sales and marketing projects in Chandigarh, Punjab, and Haryana; Lucknow, Uttar Pradesh; Coimbatore, Tamil Nadu; Bhubaneshwar, Odisha; and Raipur, Chhattisgarh.
 

Interarch Building Products had reported a net profit of Rs 86.26 crore with a revenue of Rs 1,306.32 crore for the financial year ended on March 31, 2024. The company had clocked a bottomline of Rs 81.46 crore with a revenue of Rs 1,136.39 crore for the financial year 2022-23.
 

Interarch  reserved 75 per cent of the net for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Remaining 10 per cent of the net offer shall be allocated towards the retail investors.
 

Ambit and Axis Capital are the book running lead managers of the Interarch Building Products IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with Monday, August 26 as the tentative date of listing at the bourses. Here's what brokerage firms say about the Interarch Building Products IPO:
 

Anand Rathi Research
Rating: Subscribe for long term
Interarch Building Products is ranked third in operating revenue from the PEB business in the Financial Year 2024 among integrated PEB players in India. Additionally, as of March 31, 2024, their company held the second-largest aggregate installed capacity at 141,000 MTPA, with a 6.5 per cent market share in terms of operating income in FY24, said Anand Rathi Research.
 

Their manufacturing operations are highly vertically integrated, allowing them to participate across the entire product lifecycle of PEBs. The company's P/E ratio is 17.4 times based on its FY24 earnings, with a market capitalization of Rs 1,497.43 crore post IPO-based and a market cap-to-sales ratio of 1.15 times its FY24 earnings, it said with a subscribe for long term tag, citing fair valuations.
 

Swastika Investmart
Rating: Subscribe
Interarch Building has established a strong market position as a turnkey pre-engineered steel construction solutions provider. Its integrated manufacturing operations and proven execution capabilities, coupled with a diverse customer base, position the company for continued growth. Its financial performance has been robust, characterized by consistent topline and bottom-line expansion, said Swastika.
 

"However, reliance on a limited number of third-party suppliers, absence of long-term customer agreements, and significant working capital requirements pose potential challenges. Despite these factors, the issue is valued at a P/E of 15.3 times, appears attractively priced," it added with a 'subscribe' rating for the IPO citing its market leadership, strong financial performance and reasonable valuation.
 

Arihant Capital Markets
Rating: Subscribe
Interarch Building Products is well positioned for future growth due to its strong revenue growth, strategic expansions and operational efficiencies. At the upper price band, the issue is priced at a P/E of 17.36 times based on post issue implied FY24 EPS of Rs 51.8, said Arihant Capital Markets.
 

Interarch also has a significant market share in the organized PEB market which accounts for 40-45 per cent of total PEB industry and integrate complete end to end manufacturing as well as design capability, makes it suitable to benefit from forecasted sectoral growth and rising demand towards pre-engineered steel structures in India, it added with a 'subscribe' rating.
 

Reliance Securities
Rating: Subscribe
Interarch has its presence of over 30 years in the PEB industry and has worked with industry leaders in project development & construction, providing support to critical industrial, commercial and infrastructure projects and building a critical brand presence and market position as 81 per cent of the orders for FY24 are from repeat customers, said Reliance Securities.

Rapid industrialization, urbanization and the high adoption rate of advanced construction practices, growing Investments in renewable energy, smart city mission and favorable government initiatives leading to increase in overall capex investments for tourism, warehousing and better public infrastructure connectivity will enable sustainable growth, it said with a 'subscribe' tag.
 

KR Choksey Finserv

Rating: Subscribe
Interarch is strategically positioned to capitalize on the dynamic growth of the Indian PEB industry, which has expanded significantly due to rising infrastructure development, industrialization and a growing demand for efficient construction solutions. Interarch’s strong financial performance is marked by a growing order book and solid balance sheet, said KR Choksey.
 

"Its focus on innovation, customer-centric approach, and strategic investments in technology and infrastructure aligns with the industry's shift towards greater efficiency, sustainability, and technological innovation. With plans to extend its geographical footprint and customer base, including tapping into emerging sectors such as renewable energy and data centers," it added with a 'subscribe' tag.
 

SBI Securities
Rating: Subscribe
Interarch Building is valued at FY24 P/E multiple of 17.4 times at the upper price band based on post issue capital. The company is raising funds to set up a new manufacturing facility, invest in upgrading existing manufacturing facilities, upgrade IT assets, and fund its working capital requirements, said SBI Securities.
 

"The PEB market in India is expected to grow at a CAGR of 11- 12 per cent, reaching Rs 33,000-34,000 crore between FY24 and FY29. While comparing the IPO with peer companies, the stock appears to be fairly valued across different valuation and financial parameters. We recommend subscribing to the issue for a long-term investment horizon," it said.

 

 

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.