Introduction:
The last few months have been brilliant for IPO investors. More than 16 mainstream companies have successfully raised over Rs. 100 billion through their Initial Public Offerings (IPOs) since February 2023. The month of August also follows suit, with a slew of IPOs being launched one after the other.
An infrastructure designing and construction company – Vishnu Prakash R Punglia Limited – is poised to launch its IPO for public subscription on 24 August 2023. The company plans to raise Rs. 309 crores to fund its working capital requirements and general corporate purposes. Continue reading to know in detail about this IPO and decide if you should subscribe to it or not.
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About Vishnu Prakash R Pungalia Ltd:
Incorporated in 1986, Vishnu Prakash R Punglia Limited is in the business of designing and constructing infrastructure projects for state and central governments, autonomous bodies, and private institutions. The company’s business operations can be classified into four broad categories – Water Supply Projects (WSP), Railway Projects, Road Projects, and Irrigation Network Projects.
As of 31 March 2023, the company’s business spans nine states and one Union Territory across India. It owns a fleet of around 484 construction equipment assets, including excavators, loaders, crushers, dozers, paver machines, cranes, tractors, concrete mixtures, and transport vehicles. As of 15 July 2023, the company's total order book stood at Rs. 3,800 crores.
Strengths of Vishnu Prakash R Pungalia Ltd:
- One of the key players handling Water Supply Projects in India
- 36 years of experience in the infrastructure construction industry
- Robust growth through a strong order book across segments
- Long-term and established relationships with a diversified client base
- An established track record of on-time completion of projects
- Focused on geographical diversification of its business
- Plans to work for the Indian Government’s National Infrastructure Policy (NIP)
- Boasts a robust in-house integrated business model
Key Risks/Weaknesses Of Vishnu Prakash R Pungalia Ltd:
- Almost two-thirds of the business is centered in Rajasthan
- Draws a significant portion of the revenue from selected clients
- There are certain outstanding litigations against the company
- Exposed to various risks, such as implementation, financial uncertainties, time and cost overruns, etc.
- Requires numerous licenses and regulatory compliances to carry out its business
- Engaged in a capital-intensive business. Unavailability of funding at crucial junctures may adversely impact the completion of projects
Financial Snapshot of Vishnu Prakash R Pungalia Ltd:
The table below highlights the key financials of Vishnu Prakash R Punglia Ltd. for the last three financial years. All data as per the company’s Draft Red Herring Prospectus (DRHP):
*Amount in Crores
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Here are a few takeaways from the financials of Vishnu Prakash R Punglia Ltd:
- The revenue growth has been robust in the last two financial years, expanding from Rs. 486 crores in FY 2021 to Rs. 1,168 crores in FY 2023
- The profits have doubled each time in the last two financial years
- The return and equity for FY 2022 and FY 2023 stood at highly impressive 33% and 38% respectively
- The company has maintained an excellent asset turnover ratio, which is essential for a capital-intensive business
Details of the IPO:
The Vishnu Prakash R Punglia IPO opens for public bidding on Thursday, 24 August 2023, and closes on Monday, 28 August 2023. As an investor, you can bid for a minimum of 150 shares (one lot) and in multiples thereof in the price band of Rs. 94 to Rs. 99 per share. The IPO comprises an entirely fresh issue of up to 3.12 crore equity shares without an offer-for-sale (OFS) component.
With the money raised, the company plans to:
- Fund capital expenditure requirements for purchasing new machines/equipment
- Meet working capital requirements
- Fulfil general corporate purposes
50% of the offer will be reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Buyers (NIBs), and 35% for retail investors. Refer to the table below for more details:
The final verdict
Considering the impressive valuation, strong order book, and profit-churning ability of the company, it makes sense to ‘subscribe’ to the Vishnu Prakash R Punglia Limited IPO. The current Grey Market Premium (GMP) also reflects a strong listing on the bourses.
If you want a Demat account to invest in this IPO, you can open it for free with Motilal Oswal.
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