Ceigall India IPO

Ceigall India IPO to Begin Subscription from August 1: 10 Key Things to Know from RHP Before Investing

The Ceigall India IPO is set to open for subscription on August 1, 2024. As investors prepare to evaluate this offering, here are 10 crucial details from the Red Herring Prospectus (RHP) that you should consider before making your investment decision.

1. IPO Overview

IPO Price Band and Subscription Dates

Price Band: ₹380 to ₹401 per equity share
Subscription Period: August 1 to August 5, 2024
Anchor Investor Allocation Date: July 31, 2024

IPO Size and Structure

Fresh Issue: ₹684.3 crore
Offer-for-Sale (OFS): 1,41,74,840 equity shares
IPO Lot Size: 65 equity shares (minimum), with subsequent lots of 37 shares

2. Promoters and Shareholding

Promoters

Promoters: Ramneek Sehgal, Ramneek Sehgal and Sons HUF, Avneet Luthra, Mohinder Pal Singh Sehgal, Parmjit Sehgal, and Simran Sehgal
Current Shareholding: 85.37% of the company’s equity

3. Key Peers

Listed Peers Comparison

PNC Infratech (P/E of 14.75)
G R Infraprojects (P/E of 12.60)
H.G. Infra Engineering (P/E of 20.43)
KNR Constructions (P/E of 13.17)
ITD Cementation India (P/E of 29.39)
J Kumar Infraprojects (P/E of 19.68)

4. Business Operations

Core Activities

Ceigall India specializes in Hybrid Annuity Model (HAM) projects and Engineering, Procurement, and Construction (EPC) projects across more than 10 Indian states. Key projects include elevated corridors, expressways, runways, flyovers, tunnels, metro projects, and multi-lane roads.

Current Projects

Active Projects: 18 (5 HAM and 13 EPC)
Completed Projects: 34 (16 EPC, 1 HAM, 5 O&M, and 12 item rate projects)

5. Order Book and Financials

Order Book Status

As of June 30, 2024: ₹9,470.84 crore
Order Book Breakdown: Includes NHAI projects and other public sector clients like Indian Railway Construction International and Military Engineer Services.

Financial Performance

Revenue Increase: ₹2,068.17 crore (FY 2023) to ₹3,029.35 crore (FY 2024)
Profit Surge: ₹167.27 crore (FY 2023) to ₹304.31 crore (FY 2024)

6. Key Risks

Project Delays and Cost Overruns

Delays in completing current projects could lead to cost overruns, contract terminations, or damage claims, affecting financial stability.

Competitive Bidding

The company relies on competitive bidding for project acquisition. Failure to win bids can impact future business opportunities and financial performance.

7. Lock-In Period for Anchor Investors

Lock-In Details

90-Day Lock-In: Applies to 50% of the equity shares allocated to anchor investors
30-Day Lock-In: Applies to the remaining 50% of the equity shares

8. Investment Considerations

Why Subscribe?

Growth Potential: Strong order book and recent revenue increase.
Industry Standing: Established presence in the infrastructure sector with ongoing and completed projects.

Why Caution?

Risk of Delays: Potential project delays and cost overruns.
Competitive Risks: Dependence on competitive bidding for project acquisition.

9. Conclusion

The Ceigall India IPO presents a compelling opportunity with its solid financials and extensive project portfolio. However, investors should be mindful of the inherent risks related to project delays and competitive bidding. Evaluating these factors in conjunction with your investment strategy will help in making an informed decision.