AVP Infracon Limited is a dynamic private sector firm involved in the construction of road projects based on Bill of Quantities (BOQ) and Engineering, Procurement, and Construction (EPC) methods. The Company is engaged in the business of construction and transacts the business to construct, build, alter, acquire, convert, improve, design, erect, establish, equip, develop, dismantle, pull down, level, decorate, fabricate, reconstruct, renovate, remodel, rebuild all types of infrastructure developmental works, constructions works such as technically complex and high value projects like Express ways, National Highways, Flyovers, Bridges and Viaducts, Irrigation Projects, Urban Development - Civic amenities, Hospitals, warehouses, hotels and other Commercial and Residential Projects. AVP Infracon Limited was incorporated in 2009 and in the last decade, they have excelled in diverse projects, including government contracts and national initiatives, earning the reputation as a trusted construction firm in the nation. The Company has 14 (fourteen) years of experience in the business and have 100+ experienced employees (including contractual) working towards achieving the goal the Company. The Company has completed 40 projects worth Rs 31,321.03 lakhs approximately. They bid for construction of Roads, Bridges, Irrigation and Canal Projects, Flyovers, Industrial Areas, majorly based in the state of Tamil Nadu. As on date, they have total 14 projects including 12 on-going projects worth approximately Rs 20,188.91 lakhs, and 2 additional projects worth approximately Rs 3,421.34 lakhs wherein AVP Infracon Limited becomes L1, suggesting the strong order book. Further in addition to independently managing projects similar to those they’ve previously undertaken, they have now ventured into collaborations to handle more extensive projects. They have established a joint venture with M/s. Jawahar Constructions, focusing on four-laning road construction work, with a 10% share in proportion. This joint venture is named JWP-AVP. The contract value of the said project is Rs 14,535.03 lakhs. Moreover, on August 20, 2023, they formalized a joint venture through an agreement with M/s CDR & Co. Constructions JV, holding an 20% share in the construction aspect of the EPC contract. This joint venture is named CDR-AVP (Joint Venture). The tender value of the said project is Rs 32,289 lakhs. They have applied for this tender and it is yet to be awarded. As per financial performance, AVP Infracon Limited has posted total income / net profits of Rs 58.18 Cr / Rs 2.26 Cr (FY21), Rs 64.03 Cr / Rs 3.99 Cr (FY22), Rs 115.50 Cr / Rs 12.15 Cr (FY23) and Rs 74.12 Cr / Rs 8.67 Cr (upto 31.10.23 FY24). So as per previous financials data, company has shown good growth, but sudden increase in net profit, just before IPO generates doubts. Also cash flow of company is negative. Company has posted an average EPS of Rs 4.15 and average RoNW of 38.51% for last three fiscals. Issue is priced at a P/BV of 3.96 as per NAV of 18.92 as on 31.10.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 46.91, 15.42 and 12.60 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Share India Capital Services Private Limited is associated with this SME IPO and handled 8 SME IPOs in last 1 year. From last 8 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 8 SME IPOs, all are trading above or at par issue price. ( As on 09.03.24 ) As per financials, AVP Infracon Limited has shown zig-zag results, RoNW is 46.18% and P/E is respectively 46.91, 15.42 and 12.60 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced and sudden rise in net-profit is very surprising. Company is in business of infrastructure developmental, which is highly competitive and fragmented segment. Company has strong order-book of around Rs 202/- Cr. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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