G R Infraprojects IPO: Reasonable valuations for integrated EPC player

The Gujarat-based company's public issue will raise ₹963 crore at the higher end of the IPO price band of ₹828 to ₹837 per share; offer opens July 7 and closes July 9

Staff Writer   /   July 6, 2021


G R Infraprojects, a Gujarat-based integrated road engineering, procurement and construction (EPC) company, is set to raise around ₹963 crore at the higher end of the IPO price band of ₹828 to ₹837 per share. The IPO opens on July 7 and is slated for closure on July 9. The stand out feature of this IPO is that the asking price is significantly lower than the price to earnings (P/E) multiples at which many listed infrastructure companies trade. Read on to know more.

IPO details

The public issue of G R Infraprojects will comprise an offer for sale of 1.15 crore shares by one of the promoters and other existing shareholders. There will be no fresh issue of equity. The company will not receive any proceeds from the issue. Applications will be accepted for a minimum lot of 17 shares and in multiples thereof. Not less than 35 per cent of the issue will be reserved for retail investors. The portion reserved for Qualified Institutional Buyers will be upto 50% of the offer. Non-Institutional Investors to have upto 15% of the portion reserved.
HDFC Bank Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Company Ltd, Motilal Oswal Investment Advisors Ltd, SBI Capital Markets Ltd, Equirus Capital Pvt. Ltd are the Book Running Lead Managers to the issue. KFin Technologies Private Ltd is the registrar to the offer.

IPO Factbox
CompanyG R Infraprojects Limited
Open DateJuly. 7
Close DateJuly. 9
Allotment DateJuly. 14
Listing DateJuly. 19
IPO Band₹828 to ₹837 per share
Share face value₹5 per share
Bid lot17 shares
IPO registrarKFin Tech
G R Infraprojects IPO Factbox

Company details

Established in 1995, G R Infraprojects is an integrated EPC player focussed on road and highway construction projects, particularly across north India. The company was promoted by Vinod Kumar Agarwal, Ajendra Kumar Agarwal, Purshottam Agarwal and Lokesh Builders Pvt. Ltd. Currently Promoters hold 45,339,840 Equity Shares in aggregate, representing 46.89% of the pre-offer issued, subscribed and paid-up Equity Share capital of the company.

The company has forayed into railway projects too. The company reported operational revenue of ₹7,844 crore and net profit of ₹953 crore for FY21. On debt-to-equity, G R Infraprojects fares better than highly-leveraged players such as Ashoka Buildcon and Sadbhav Engineering. The company’s EBITDA and net profit margins are at par with those of KNR Construction and higher than those of PNR Infratech.

IPO valuation

At IPO price of ₹837, G R Infraprojects discounts its FY2021 earnings by 8.5 times. This is lower than the price to earnings (P/E) multiples at which many listed infrastructure companies trade. Companies such as Ashoka Buildcon, PNC Infratech, KNR Constructions, Dilip Buildcon and IRB Infrastructure Developers trade at a trailing twelve month- P/E ratio ranging from 10 to 50 times. As on March-end 2021, G R Infraprojects had an order book of ₹19,026 crore, which comprises 16 EPC projects, 10 HAM projects and 3 other projects. The order book to sales ratio is 2.4 times.

Here’s what brokers say

Axis Capital – The road construction industry in India is very competitive. The company’s competition depends on various factors, such as the type of project, total contract value, potential margins, complexity, location of the project and risks relating to revenue generation. While service quality, technical ability, performance record, experience, health and safety records and the availability of skilled personnel are key factors in client decisions among competitors, price often is the deciding factor in most tender awards.

Hem Securities – We like the financial performance posted by company with healthy balance sheet status. Also, the company has healthy order book which gives strong revenue visibility going forward. With company strives to maintain robust financial position and low debt levels along with emphasis on strong balance sheet enable company to pursue future opportunities for growth. Hence we recommend “Subscribe” on issue both for listing gain & long term purpose.

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