Ceigall India Limited is an infrastructure construction company with experience in undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways. The principal business operations are broadly divided into EPC projects and hybrid annuity model ('HAM') projects, which are spread over ten states in India. As on the date of this Red Herring Prospectus, they are eligible to bid for single NHAI EPC projects up to a value of Rs 57,000/- million and for single NHAI HAM projects up to a value of Rs 55,000/- million. They have been empanelled to participate with the Delhi Metro Rail Corporation Limited in its upcoming tenders involving inter alia construction of railways, mega bridges and tunnels in India and abroad and also with a public sector undertaking for highways, bridges and tunnel construction work in north-eastern states of India, and such empanelment is mutually extendable. As on the date of this Red Herring Prospectus, the Company has completed over 34 projects, including 16 EPC, one HAM, five O&M and 12 Item Rate Projects, in the roads and highways sector. Currently, the Company has 18 ongoing projects, including 13 EPC projects and five HAM projects. In addition to undertaking operation and maintenance ('O&M') activities in accordance with the contractual obligations under the EPC/HAM concession agreements, they have also undertaken independent O&M projects. Further, they have also undertaken in the past and continue to undertake sub-contracting projects. The Order Book, as on June 30, 2024 and Fiscals 2024, 2023 and 2022, amounted to Rs 94,708.42 million, Rs 92,257.78 million, Rs 108,090.43 million and Rs 63,461.30 million, respectively. As on June 30, 2024, projects awarded by NHAI contributed 80.31% to the Order Book. The other public sector clients include Indian Railway Construction International Limited ('IRCON'), Military Engineer Services ('MES') and Bihar State Road Development Corporation Limited ('BSRDCL'). Company's Book to Bill Ratio as of Fiscals ended March 31, 2024, March 31, 2023 and March 31, 2022 was 3.05, 5.23 and 5.60 times, respectively. Company has an experience of executing projects across diverse geographic locations in India with varying degrees of complexities such as construction in high-traffic and high-density areas, construction of tunnels in hilly terrain and slope protection and rock fall protection due to high rainfall and involving specialised structures such as tunnels, bridges and elevated roads. The have diversified the geographical presence in construction and development and execution of major multi-lane highway projects with specialised structures in various states of India, including Punjab, Haryana, Rajasthan, Uttar Pradesh, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Delhi, Maharashtra and Bihar. As on date of this Red Herring Prospectus, the projects are spread across ten states in India. While they execute a majority of the projects themselves or through the Subsidiaries, they also form project-specific joint ventures, special purpose vehicles with other infrastructure and construction companies. As on the date of this Red Herring Prospectus, they have nine Subsidiaries (including five direct Subsidiary and four indirect Subsidiaries) and eight Joint Ventures, for the purpose of execution of projects. As per financial performance, Ceigall India Limited has posted total income / net profits of Rs 1,146.50 Cr / Rs 125.86 Cr (FY22), Rs 2,087.04 Cr / 167.27 Cr (FY23) and Rs 3,066.19 Cr / Rs 304.31 (FY24). So as per previous financials data, company has shown good growth. Also order book is also very strong, but negative cash flow always remain a concern for this segment. Company has an average EPS of Rs 14.57 and average RoNW of 31.05% for last three fiscals. Issue is priced at a P/BV of 6.95 as per NAV of Rs 57.68/- as on 31.03.24. If we attribute latest earnings of FY22, FY23, and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 55.50, 41.76, and 22.96 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is given in above table. On BRLM's front, Four lead managers are associated with this IPO, and have handled around 92 IPOs ( Mainboard and SME ) in last three fiscals. ICICI Securities Limited: This is 45th IPO from this BRLM. From last 10 IPOs, two opened below issue price on the day of listing. As of now, from last 10 IPOs, two are trading below issue price. (As on 29.07.23) IIFL Securities Limited: This is 33th IPO from this BRLM. From last 10 IPOs, one opened below issue price on the day of listing. As of now, from last 10 IPOs, all are trading above issue price. (As on 29.07.23) JM Financial Limited: This is 39th IPO from this BRLM. From last 10 IPOs, two opened below issue price on the day of listing. As of now, from last 10 IPOs, three are trading below issue price. (As on 29.07.23) As per financials, Ceigall India Limited has shown good growth, RoNW is 33.57% and P/E is respectively 55.50, 41.76, and 22.96 as per FY22, FY23, and FY24 earnings. So, issue looks aggressively priced and company has strong order book of Rs 94,708.42 million as on 31.06.24, but negative cash-flow will remain a concern. Company is an infrastructure construction company, which is highly competitive and fragmented business segmented. As GoI is focusing on development of infrastructure in Bharat and so there will be good growth in this segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO and one may consider it for long term. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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