Strong Financials and Pandemic-Related Uncertainty: Should You Subscribe to GR Infraprojects IPO?

With a host of initial public offerings expected to hit the market in the coming days, you have no dearth of investment options. However, evaluating them carefully can help you identify the ones that are worth investing your hard-earned money in. Here we analyse GR Infraprojects Ltd IPO.

About GR Infraprojects Ltd

Incorporated in Dec 1995, GR Infraprojects Limited (GRIL) is an integrated road engineering, procurement, and construction company (EPC). They are experienced in designing and construction activities and working on road and highway projects. In the road sector, GRIL undertakes civil construction projects under the EPC, BOT (Build Operate Transfer), and HAM basis. They also have experience in constructing state and national highways, bridges, flyovers, culverts, rail over-bridges, and airport runways.

GR Infraprojects Ltd has also diversified into manufacturing activities of electric poles, thermoplastic road-making paints, fabricating metal crash barriers, and road signages, and railway sector projects. The company executed their first projects for the Public Works Department (PWD), Rajasthan in 1997. The Bid Project Cost was Rs 2.65 cr. Since 2006, the company has executed over 100 road construction projects.

Today, GR Infraprojects has road and highway projects across 15 states in India, the Vadodara Mumbai Expressway project awarded by NHAI being their latest one. This project is on HAM basis and involves a Bid Project Cost of Rs 2,747 cr. As of Apr 2021, GR Infraprojects Ltd had completed over 100 road construction projects and currently has four BOT projects under construction. Currently, the company has 14 road projects under the HAM. Of these, five are currently operational, four are under construction, and five more are yet to be commenced.

Business verticals of GR Infraprojects Ltd

GRIL is a well-diversified company having the following businesses verticals:

• Civil construction activities to provide EPC services
• Development of roads and highways on a Build Operate Transfer basis including under annuity and Hybrid Annuity Model (HAM)
• Manufacturing activities to manufacture thermoplastic road-marking paint, electric poles and road signage, process bitumen, and fabricate and galvanize metal crash barriers

Manufacturing facilities

GRIL has three manufacturing facilities at Guwahati (Assam), Udaipur (Rajasthan), and Sandila (Uttar Pradesh), and a fabricating and galvanization unit at Ahmedabad (Gujarat).

The company’s promoters are Vinod Kumar Agarwal, Purshottam Agarwal, Ajendra Kumar Agarwal, and Lokesh Builders Private Limited.

GR Infraprojects IPO details

• The Rs 963-cr worth IPO is set to open on 7thJul 2021 and close on 9thJul 2021
• While the face value of each share is Rs 5, the price band of the IPO is in the range of Rs 828 to Rs 837 apiece
• The minimum lot size is 17 shares and the maximum lots allowed for subscription are 14
• The company is looking to get listed on both BSE and NSE and the likely date of listing is 19thJul 2021

Objects and utilisation of the IPO proceeds

The IPO is entirely an offer for Sale (OFS) of up to 1.15 cr equity shares. Since the IPO is entirely OFS, all the proceeds will go to the promoters and investors looking to liquidate their positions. The company will not receive any funds.

Category-wise reservations of the issue

• Up to 50% for qualified institutional buyers (QIBs)
• 15% or above for non-institutional bidders
• 35% or above for retail investors
• 2.25 lakh shares are reserved for employees

Book running lead managers to the issue

ICICI Securities, SBI Capital Markets Limited, HDFC Bank Limited, Motilal Oswal Investment Advisors Limited, Kotak Mahindra Capital Company Limited, and Equirus Capital Private Limited are the book running lead managers to the offer. Karvy Computershare Private Limited is the registrar.

Peers of GR Infraprojects

The company’s listed peers include PNC Infratech, KNR Constructions, Dilip Buildcon, Ashoka Buildcon, Sadbhav Engineering, IRB Infrastructure Developers, and HG Infra Engineering.

Valuation of GRIL

Based on FY 2021 earnings, the company commands a PE of 8.5, which is lower compared to its peers namely PNC Infratech that are trading at 14.7, Dilip Buildcon Ltd at 23.9, and Ashok Buildcon at 11.3 basis FY 2021 earnings, respectively. The company seeks a market capitalisation of Rs 8,093 cr, second to their peer Dilip Buildcon.

Continue to read the financials, strengths, and risks of GR Infraprojects Ltd and their IPO here.