Motorway construction used to be within the dreary lane in FY24, with total awards of 8,581 km, as against a planned purpose of 13,290 km. The general elections, and components in some areas connected to escalated land acquisition fees, slowed down the section.
However the section is decided for revival, with the Funds reiterating the infrastructure focal point. The Minister for Avenue Transport & Highways recently said that ₹3 trillion value of projects would possibly be awarded inside of the following three months and a total of ₹5 trillion allocation for FY24 is no longer off route.
In this regard, a predominantly engineering, procurement and construction (EPC) player, Ceigall India, has near with its IPO that opened last Thursday and is on till August 5. The corporate also executes HAM (hybrid annuity model) projects.
Ceigall India’s IPO totals as much as ₹1,252 crore, with ₹684 crore being a recent disaster and ₹568 crore coming as provide for sale.
A giant, varied expose e-book with focal point on EPC projects that face fewer uncertainties, a solid execution document and wholesome financials are positives for the company.
At the upper conclude of the value band of ₹380-401, the provide asks for 22 instances its FY24 per share earnings on a diluted basis. This valuation multiple is in step with or at a itsy-bitsy top price to the likes of KNR Construction, HG Infra Engineering and J Kumar Infraprojects that commerce at 20-23 instances trailing earnings.
Investors can subscribe to the IPO of Ceigall India with a 2-3-year point of view and no longer with a behold of any listing pop.
The corporate’s revenues grew sharply over the 2-year period after FY22 at 63.6 per cent yearly to ₹3,029.4 crore in FY24, while acquire profits surged at a CAGR of 55.3 per cent over the the same period to ₹304.3 crore by FY24.
The corporate’s EBITDA margin of 17.1 per cent in FY24 is amongst the one within the industry, as is its return on equity of 33.6 per cent.
A giant, varied clientele
Ceigall India is a highways and dual carriageway construction player with extra than twenty years of ride. The corporate has accomplished extra than 34 projects with 1,700 lane km accomplished and a pair of,150 lane km of O&M projects accomplished.
Some of its great dual carriageway projects accomplished encompass Kartarpur Sahib, Delhi-Saharanpur PKG II, Ismailabad-Dhand PKG I and Ramban-Banihal PKG II.
It has projects relating elevated roads, flyovers & bridges, rail overbridges, tunnels, highways and airport runways.
With projects accomplished or ongoing in 10 States, the company has a rather huge footprint.
Ceigall India has a track document of executing its projects on or earlier than time. As a demonstration of its execution capabilities, the company got bonuses for finishing up the Khemkaran-Amritsar and Ismailabad-Dhand PKG I projects properly earlier than time.
Punjab, Jammu & Kashmir, Haryana, Maharashtra, Uttar Pradesh, Bihar and Jharkhand are States the place it has ongoing constructions. The company has 13 EPC and five HAM projects currently beneath components. Its consumers encompass NHAI, Ministry of Avenue Transport & Highways, IRCON World, Defense force Engineer Companies and products, PWD Punjab and Bihar Deliver Avenue Building Company.
For four of its five upcoming HAM projects, the company has already tied up the funds with banks. These projects are value ₹621 crore to ₹1,656 crore.
Wholesome expose e-book and debt reduction
Ceigall India has an expose e-book of ₹9,471 crore as of June 30, at 3.2 instances its FY24 revenues, which is amongst the most sensible within the industry, and lends appreciable revenue visibility.
Around 71.3 per cent of its FY24 revenue came from EPC projects, while 28.4 per cent came from HAM contracts, making for a sound revenue combine. The corporate’s e-book-to-bill ratio of 3.05 is, as soon as more, one in every of the one within the dual carriageway construction section.
Get working capital days possess lowered from 12 days in FY22 to eight days in FY24, much lower than buddies.
Ceigall currently has a high debt-equity ratio of 1.3 in FY24. On the replacement hand, since ₹413.4 crore from the disaster proceeds is decided to be aged for mortgage prepayment and repayment, the debt-equity ratio would near down to a extra manageable 0.5 instances.
Going by a NITI Aayog file on the Nationwide Infrastructure Pipeline, CareEdge Study estimates a 17.22 per cent annual advise in dual carriageway sector investments over FY24-FY28 to ₹4,54,800 crore by FY28.
Avid gamers similar to Ceigall India seem properly-positioned to make basically the diverse the alternatives that this kind of advise in dual carriageway investments offers.
