Started in 1976, IRCON International Limited, is New Delhi based engineering and construction company, specialising in major infrastructure projects including railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, electrical and mechanical works, commercial and residential properties, development of industrial areas and other infrastructural activities. Company provides EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects. In 2016, Company was ranked 248 in the list of the top 250 international contractors by Engineering News Record (ENR) of the US. IRCON has 26 project offices and 5 regional offices to support and manage its business operations throughout India and five overseas project offices in Sri Lanka, Bangladesh, Malaysia, South Africa and Algeria to provide onsite support overseas. Company has rich experience in executing major construction and infrastructure projects, both internationally and domestically. The scope of its services for such projects primarily includes design and engineering of the project, procurement of equipment and packages, project management and commissioning. Company executes majority of its projects independently, but also forms joint ventures and consortiums with other infrastructure and construction companies, when specific project requires them or their partner to meet specific eligibility requirements. As of March 31, 2018 company has 1179 full time employees on its payroll. In railway construction business as on March 31, 2018, company was undertaking a total of 33 railway projects in two countries internationally and in 13 states of India, with an aggregate length of 1664.74 km. Company's order-book for these ongoing projects amounted to Rs 19,425.77 Cr. accounting for 86.79% of total order-book. For construction of highways and roads, as on March 31, 2018, they were undertaking five road projects and order-book of these projects amounted to Rs 1278.02 Cr, accounting for 5.70% of total order book. For electrical business to carry out railway electrification and railway siding, they were undertaking eight projects and order book of these projects amounted to Rs 1208.39 Cr and accounting to 5.39% of total order book. For building and other business, they were undertaking 3 projects with order book of Rs 494.61 Cr and accounting to 2.21% of total order book. Company's total order book as on March 31, 2018 was Rs 22,406.79 Cr. As per financial performance, IRCON has posted total income/net profits of Rs. 4150.77 cr. / Rs. 746.98 cr. (FY14), Rs. 3232.51 cr. / Rs. 570.13 cr. (FY15), Rs. 2908.64 cr. / Rs. 362.44 cr. (FY16), Rs. 3301.35 cr. / Rs. 397.70 cr. (FY17) and Rs. 4212.40 cr. / Rs. 412.96 cr. (FY18). Top-line and bottom-line remained zig-zag all these years. IRCON has posted an average EPS of Rs. 40.62 and average RoNW of 10.65% for last three fiscals. Issue is priced at a P/BV of 1.19 as per NAV of 398.51 on 31.03.18. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 11.27. As per RHP, there is no listed peers and issue looks reasonably priced. On BRLM's front, five merchant bankers associated with this issue and have handled 58 public issues in the past three years. When we take recent 10 IPOs of each BRLM then out of those 6 issues opened below their offer price and 4 opened at par on listing dates. As per financials, company's top-line and bottom-line are zig-zag, RoNW is 10.65% for last three fiscals and issue is priced at P/E of around 11.27 as per latest earnings. Company is in Engineering and construction business with order book of around 22,400 Cr. Government is also focused on infrastructure development. So we give SUBSCRIBE rating to this IPO.
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