Started in 2005, RKEC Projects Limited operates as an infrastructure civil engineering construction company in India. They are mainly engaged in the business of Civil Construction such as construction of Highways, roads and bridges. The company involved in designing and undertaking construction projects which include bridges, ports, dams, high-rise structures, airports, cross water, roads, highways, oil and gas pipelines, and environmental structures. They have completed projects for diverse range of clients including Defence sector, Railways, Ports, Adani Port, Vedanta Ltd, IVRCL Limited, Rashtriya Ispat Nigam Limited and ESSAR. During the last decade, they have undertaken and successfully completed many construction projects in India covering states of Andhra Pradesh, Tamil Nadu, Gujarat, Odisha, Rajasthan andMaharashtra. In addition to them, they have expanded their presence to three more states, Kerala, Uttar Pradesh andManipur, with their ongoing projects. On performance front, for last five fiscals, RKEC has posted turnover/net profits of Rs. 81.32 cr. / Rs. 2.80 cr. (FY14), Rs. 58.64 cr. / Rs. 1.08 cr. (FY14), Rs. 71.75 cr. / Rs. 1.96 cr. (FY15), Rs. 113.51 cr. / Rs. 3.19 cr. (FY16) and Rs. 200.12 cr. / Rs. 13.13 cr. (FY17). The Company has been delivering consistent performance and growth since FY14. In FY17, there is sudden jump in top line and bottom line. Last three fiscals average EPS is Rs. 4.12, RoNW is 22.41%. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of 8.22 and at a P/BV of 2.22. Thus issue is priced reasonably. Listed players in same space are trading at P/E range of 338 to 11. On merchant banker’s front, this is the 40th mandate from its stable in last three years. Out of last 10 recent listings, 1 issue opened at discount, 2 at a premium of 2.5 to 5% and the rest with 20% premium to offer price on the day of listing. As per financials, company's growth is good since FY14, but there is sudden jump in top line and bottom line in FY17, RoNW is 22.41% for last three fiscals and issue is reasonably priced. And looking at Government focus to increase spending on infrastructure development, future looks good. So we give SUBSCRIBE rating to this SME IPO.
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