GR Infraprojects IPO to Hit the Market on 7 July. All You Need to Know

GR Infraprojects' initial public offering (IPO) will open for subscription on Wednesday, 7 July 2021.

The public issue will be an offer for sale (OFS) of up to 11.5 m shares by promoters and shareholders. There will not be any fresh issue of shares.

The primary market offering will close on 9 July 2021.

The company has fixed a price band of Rs 828 to Rs 837 per equity share for its IPO.

HDFC Bank, ICICI Securities, Kotak Mahindra Capital, Motilal Oswal Investment Advisor, SBI Capital Markets, and Enquires Capital are the book lead running managers to the issue.

KFin Technologies will be the registrar to GR Infraprojects.

GR Infraprojects IPO Details

Issue Type	Book Built Issue IPO
Face Value	Rs 5 per equity share
IPO Price	Rs 828 to Rs 837 per equity share
Market Lot	1 lot - 17 shares
Issue Size	Rs 9.6 bn
Offer for Sale	Rs 9.6 bn
Basis of Allotment Date	Wednesday, July 14, 2021
IPO Listing Date	Monday, July 19, 2021

Data Source: Company's Red Herring Prospectus

An OFS comprises 6.4 m shares by India Business Excellence Fund I, 3.2 m shares by India Business Excellence Fund, 1.1 m shares by Lokesh Builders, 4.9 lakh shares by Pradeep Kumar Agrawal, 1.3 m shares by Jasamrit Premises.

Vinod Kumar Agarwal, Ajendra Kumar Agarwal, Purshottam Agarwal, and Lokesh Builders are the company promoters.

Shares on offer

Up to 50% of the net offer will be reserved for qualified institutional buyers (QIBs), 15% of the portion for non-institutional investors (NIIs), and remaining 35% will be kept aside for the retail investors.

The IPO of GR Infraprojects includes a reservation of up to 2.3 lakh equity shares for subscription by eligible employees, according to the company's red herring prospectus (RHP).

GR Infraprojects will not receive any proceeds from the offer since it involves only the OFS.

Objects of the issue

• To achieve the share listing benefits on the BSE and NSE.
• To make an offer for sale of up to 11.5 m shares of face value of Rs 5 per share, aggregating to Rs 9.6 bn.

About GR Infraprojects

GR Infraprojects is an integrated road engineering, procurement, and construction (EPC) company.

It has experience in design and construction of various road/highway projects across 15 states in India.

It has recently diversified into projects in the railway sector.

It mainly undertakes civil construction projects under the EPC and build operate transfer (BOT) basis in the road sector.

It has also diversified into manufacturing of thermoplastic road-making paints, electric poles, road signages, and fabricating metal crash barriers.

The company was incorporated in December 1995 and have gradually increased their execution capabilities in terms of the size of projects they have bid for and executed.

The first road project executed by the company was for the public works department, Rajasthan in 1997 with a bid project cost of Rs 26.5 m.

Competitive strengths

• Expertise in road projects that is state and national highways, culverts, flyovers, airport runways, tunnels, etc.
• Strong project execution capabilities.
• Robust financial performance track record.
• Experienced promoters and managers team.

Important details of the company

CRISIL upgraded long term rating to AA/Stable from AA-/Positive. They reaffirmed short term rating as A+ as on 20 October 2020.

As of March 2021, out of its BOT projects, the company have one operational road project which has been constructed and developed on a BOT (annuity) basis.

Also, it has 14 road projects which have been awarded under the hybrid annuity model (HAM).

Out of these, five projects are currently operational, four projects are under construction, and construction is yet to commence on five.

Financial performance

For the fiscal year 2020, the company reported a total income of Rs 64.2 bn against Rs 53.2 bn a year ago.

Net profit for the period stood at Rs 8 bn versus Rs 7.1 bn in the same period last year.

As of December 2020, its total borrowings were at Rs 42 bn, while its net worth was Rs 37.3 bn. The total order book stood at Rs 182.2 bn.

The average industry price to earnings P/E stands at 16.73 times.

The weighted average return on net worth for fiscals 2019, 2020, and 2021 is 26.2%.

(Rs m)	FY18	FY19	FY20	Dec-20
Revenues	32,954.6	52,825.8	63,727.0	51,081.7
Revenue Growth (%)		60.3%	20.6%
Expenses	28,248.6	43,186.9	52,694.4	41,821.6
Profit Before Tax (PBT)	5,107.4	10,044.2	11,516.2	9,739.4
Net Profit	4,126.9	7,145.1	7,992.3	7,020.3

Data Source: Company's Red Herring Prospectus

The company has not paid any dividend on its equity shares during the last three fiscals.

The amount of future dividend payments, if any, will depend upon a number of factors, including future earnings, financial condition, cash flows, working capital requirements, contractual obligations, applicable Indian legal restrictions, and capital expenditures.

For more details, check out GR Infraprojects Red Herring Prospectus.

Comparison with listed peers

GR Infraprojects' listed peers include KNR Constructions, PNC Infratech, HG Infra Engineering, Dilip Buildcon, Ashoka Buildcon, IRB Infrastructure Developers, and Sadbhav Engineering.

Company	Revenues	Net Profit	Return on Net Worth (%)
KNR Constructions	24.5	2.4	17.2%
PNC Infratech	56.0	5.4	21.5%
HG Infra Engineering	22.2	1.7	20.2%
Dilip Buildcon	97.2	4.0	11.2%
IRB Infrastructure Developers	68.5	7.4	10.8%
Sadbhav Engineering	34.9	11.1	49.5%
Ashoka Buildcon	50.7	1.5	39.9%

Data Source: RHP, Equitymaster
Figures in Rs bn and as on 31 March 2020

Grey market premium of GR Infraprojects

GR Infraprojects shares are trading at a premium of Rs 315 today in the grey market.

What's the ideal IPO strategy to follow?

The excitement surrounding the slew of IPOs in the coming months is huge. As many as five companies came out with their IPOs last month.

Investors are already euphoric on loss making companies such as Zomato and Paytm.

Smallcap analyst at Equitymaster, Richa Agarwal, recently shared her views on the much-hyped Paytm IPO.

Here's what she wrote...

• Investing in a company is like owning a piece of business.
  
  A loss-making business with no clear road to profits isn't one I would recommend.
  
  And certainly not at the time of its IPO.

You can read the entire editorial here: Paytm IPO: Will it Deliver Profits?

If you are investing in an IPO, weigh in all the positive and negative factors affecting the company.

Take a close look at the company's financials and valuations. It would give you a clear picture of what's brewing.

Happy Investing!

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...