Likhitha Infrastructure Limited

Likhitha Infrastructure Limited, started in 1998, Hyderabad based, is an Oil & Gas pipeline infrastructure service provider in India, focused on laying pipeline networks along with construction of associated facilities; and providing Operations & Maintenance services to the City Gas Distribution ('CGD') Companies in India. Over the years, they have diversified the gamut of services being provided by the Company from Cross-Country Pipeline Projects (CCP); City Gas Distribution (CGD) Projects to providing Operation & Maintenance (O&M) Services to CGD Companies. The client base comprises of established players in the Oil and Gas Industry, both in public and private sector. Company has presence (including past operation) in more than 16 states and 2 Union Territories in India. The Company has successfully laid over 600 Kms. of Oil and Gas pipelines including steel and Medium-Density Polyethylene ('MDPE') network in past 5 fiscals. Additionally, the Company has laid approximately 800 kms of Oil and Gas pipelines for on-going projects.  Company's order book, as of any particular date, consists of the unexecuted portions of the outstanding orders, that is, the total contract value of the existing contracts secured by them, as reduced by the value of work executed and billed until the date of such order book. The total Order Book as of July 31, 2020 was approximately Rs. 66,258.97 Lakhs. The following table sets out forth operation-wise summary of the Order Book as of July 31, 2020: On financial performance front, Likhitha has posted turnover/net profits of Rs. 108.06 cr. / Rs. 7.68 cr. (FY17), Rs. 88.61 cr. / Rs. 7.18 cr. (FY18), Rs. 140.55 cr. / Rs. 17.88 cr. (FY19) and Rs. 162.79 cr. / Rs. 19.76 cr. (FY20). Company has not provided Q1 results. Thus company has posted good growth over last couple of years. The remuneration of the Promoter/ Promoter Group to the total employee benefit is below 25% for the FY20, but has exceeded 25% percentage in the past financial years. Company has posted an average EPS of Rs. 11.68 and average RoNW of 35.06% for last three fiscals. Issue is priced at a P/BV of 2.51. If we attribute latest earnings of FY20 on fully diluted equity post issue, then asking price is at a P/E of around 12. There is no peers as per RHP, but we may compare other infrastructure companies and they are trading in range of 8 - 15. On BRLM's front, Unistone Capital Pvt Ltd has handled 2 SME IPOs in last three fiscals, and from last 2 SME IPOs, both opened above issue price on the day of listing. As of now, from last 2 IPOs, 1 is trading below issue price and remaining above issue price. This company will list in T-Group. ( As on 25.09.2020 ) As per financials, company's growth is good, RoNW is 35% for last three fiscals, debt is low and issue is priced at P/E of around 12 as per FY20 earnings. With respect to other infrastructure companies, issue looks fully priced. In BHARAT, there is high growth opportunity for Oil & Gas pipeline infrastructure, but competition is also very tough due to bigger private players. So we give NEUTRAL rating to this IPO.

• 1 MR. SRINIVASA RAO GADDIPATI
• 2 MS. LIKHITHA GADDIPATI