G R Infraprojects IPO would open for subscription on 7th July 2021. GR Infraprojects is an integrated road engineering, procurement and construction (EPC) company with an experience in design and construction of various road / highway projects across India. It has recently diversified into projects in the railway sector too. Company generated strong revenue and margin growth in the last 3 years. In this article we would provide complete review and analysis about GR Infraprojects Limited IPO.
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About GR Infraprojects Limited
G R Infraprojects is an integrated road engineering, procurement, and construction company with experience in designing and construction activities and road/highway projects in India. It undertakes civil construction projects under the EPC and BOT (Build Operate Transfer) basis in the road sector but also diversified into manufacturing activities of thermoplastic road-making paints, electric poles, road signages, and fabricating metal crash barriers.
GR Infraprojects Limited competitive strengths
1) It has expertise in road projects i.e., state and national highways, culverts, flyovers, airport runways, tunnels, etc.
2) It has strong project execution capabilities.
3) Company has robust financial performance track record.
4) It has experienced promoters and managers team.
G R Infra projects – IPO issue details
| IPO Opening Date | 07-Jul-21 |
| IPO Closing Date | 09-Jul-21 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 5 per equity share |
| IPO Price band | Rs 828 to Rs 837 per equity share |
| Lot Size | 17 Shares |
| Min Order Quantity | 17 Shares |
| Listing at | BSE and NSE |
| Issue Size | Rs 963.28 Crores |
Objects of the issue
Company has come-up with public issue for offer for sale where selling share holders would sell the shares and company would not get any proceeds from the issue. There is no fresh issue of share except that company would get benefitted by listing its shares on stock exchanges.
Company promoters and Financial Performance
Vinod Kumar Agarwal, Ajendra Kumar Agarwal, Purshottam Agarwal, and Lokesh Builders Private Limited are the promoters of the company.
Here are the restated consolidated revenue and profit details in the last 3 years.
| Period ending | Total Revenues (Rs in Mns) | Profits after tax (Rs in Mns) |
Profit % |
|---|---|---|---|
| Mar-19 | 53,255.3 | 7,166.0 | 13.5% |
| Mar-20 | 64,237.0 | 8,008.0 | 12.5% |
| Mar-21 | 79,069.4 | 9,532.2 | 12.1% |
What we like in G R Infra Projects IPO?
Here are the positive factors what we liked in this company.
1) Company has posted strong revenue growth at 21.85% CAGR in the last 3 years. Company revenues increased from Rs 5,325.5 Crores in FY2019 to Rs 7,906.9 Crores in FY2021.
2) Company has posted good growth in margins at 15.3% CAGR in the last 3 years. Its margins improved from Rs 716.6 Crores in FY2019 to Rs 953.2 Crores in FY2021.
3) Company has good track record of timely execution of projects. Company has successfully completed 100 road construction projects from 2006 till date.
4) Company has healthy order book of Rs 19,025 Crores by the end of Mar-2021. This comprises 16 EPC projects, 10 HAM projects and 3 other projects. This provides strong revenue visibility in future.
5) Company employees would get discount of Rs 42 per share.
Risk Factors in G R Infraprojects IPO
1) Continuing effect of the covid-19 pandemic in business is highly uncertain and cannot be predicted
2) Company derives majority of the revenue from its civil constructions. Its financial condition would materially affect if they failed to obtain new contracts, or its existing contracts are terminated
3) Its business is dependent majorly on road projects in India and the ones which are awarded by govt authorities. It derives significant revenues from contracts awarded by Govt entities. Any adverse change in govt policies may lead its contracts being foreclosed and terminated which can affect its business
4) Its projects are awarded primarily through competitive bidding process. Its bids may not always be accepted.
5) Company business is capital intensive. If there are insufficient cash flows to meet required payments on its debts and working capital requirements, it may face have adverse effect on the company operations.
GR Infraprojects IPO Schedule
| Offer Open | 07-Jul-21 |
| Offer close | 09-Jul-21 |
| Finalization of Allotment | 14-Jul-21 |
| Initiation of Refunds | 15-Jul-21 |
| Credit to Demat Account | 16-Jul-21 |
| IPO Shares Listing Date | 19-Jul-21 |
GR Infraprojects Limited IPO Price Valuations
GR Infraprojects IPO Issue Price band is Rs 828 to Rs 837.
1) On the upper price band of Rs 837 and EPS of Rs 98.31 for FY21, the P/E ratio works out to be 8.5x.
2) For the last 3 years average EPS of Rs 89, the P/E ratio is 9.4x.
3) Means, the company asking price of Rs 837 of the upper price band in the P/E range of 8.5x to 9.4x.
5) There are listed peers like IRB Infra where it is trading at P/E 48x (Highest) and HB Infra at P/E of 10.4x (Lowest) and industry average P/E is 16.7x.
Hence, GR Infraprojects Share Price of Rs 837 (upper price band) is reasonably priced.
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Should you invest in GR Infraprojects IPO?
GR Infraprojects Limited is into civil construction projects.
Company generated strong revenue growth in the last 3 years.
Company’s generated good margins in the last 3 years.
It has good order book which gives strong revenue visibility for future.
GR Infraprojects IPO share price is reasonably priced.
Considering all these positive factors, we recommend SUBSCRIBE for this IPO for short term to long term perspective.
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Hello sir, thanks for the analysis, waiting for Clean Science IPO analysis 🙂
Vaibhav, I am analyzing it. Should get posted by tomorrow.
RHP page 92 under capital structure shows buy back of 27,59,422 shares of Rs5 each on 1st April 2021. Cash flow statement on page 269 shows amount spent towards buyback as 13.81 lakh. Does that mean buyback at face value? My broker raised this query three time in Broker/Analyst meet but was not taken up by conductor of meet. He even sent emails to all the lead managers & company asking for clarifications but till now no reply received.Can you through some light on this?
Hemant, I don’t have info for this transaction. If you get an update from company/BLRM, you can post here which might be helpful to others if they are looking for such info.
Hi Suresh, just a request to start including few financial ratios in your analysis especially debt to equity ratio. It will help a lot. Thanks
Sure Nikhil, would add going forward
The analysis is good but it does not show short term,long term dues to financial institutions.Dues from govts towards projects and income tax dues.etc
Hello VB Sharma, We have covered major points and indicated that all other risk factors investors need to refer to IPO prospectus. There are several such cases in risk factors, pls go through them