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Sep 13, 2017 02:22 PM IST | Source: Moneycontrol.com

Capacit’e Infraprojects IPO opens: Should you subscribe?

The company is set to raise Rs 400-crore with a price band of Rs 245 to Rs 250 per share.

 
 
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Mumbai-based construction company Capacit'e Infraprojects’ initial public offering (IPO) opened for subscription on Wednesday.

The company is set to raise Rs 400-crore with a price band of Rs 245 to Rs 250 per share.

The issue will close on September 15. Bids can be made for minimum of 60 equity shares and in multiples of 60 shares thereafter.

The book running lead managers to the issue are Axis Capital, IIFL Holdings and Vivro Financial Services. Its equity shares are proposed to be listed on NSE and BSE.

Brokerage houses largely recommend subscribing to the issue with a long term investment view.

ICICI Securities | Rating: Subscribe

The brokerage house said that given the robust orderbook position of Rs 4,603 crore, along with lean balance sheet and strong chances ahead, the company could perform better than the industry.

Motilal Oswal

Motilal Oswal said that despite infrastructure segment struggling to grow in past few years, company has successfully delivered strong revenue / EBITDA / PAT growth of 75%/121%/169% in FY14-17.

It also highlighted strengths such as large order book with marquee client base and repeat orders, presence in cities with high growth potential, expansion in mass housing segment, superior ROEs /ROCEs of 29.6% and 38.1%. At

On the valuation front, it said that the issue was priced at PE of 24xFY17 post issue (and 19x FY17 pre-issue) which is attractive in context of strengths mentioned above.

Sharekhan

The brokerage house said that the company’s valuation is at 24.5x P/E on FY2017 earnings, which is tad higher than its listed peers. “The other valuation multiples are also slightly higher than listed players, which we believe is on account of relatively strong order book (3.98x its FY2017 consolidated revenue) and lower debt-equity ratio (0.17x on expanded equity at the upper price band), signifying strong earnings growth potential,” it added.

“Hence, we believe a slightly higher valuation is on account of strong track record of earnings growth over the trailing four years, strong order book position and a leaner balance sheet,” the report added.

Mehta Investments | Rating: Subscribe

The brokerage said that the company was a good pick in the Indian high rise infrastructure growth story.

At Rs. 250, Capacite will have a market cap of Rs. 1700 crore; with PE earnings around 18x on FY17 on discounted earnings.

Meanwhile, on valuation it said that the issue is attractively priced considering FY18 earnings when compared with small listed spaces which are available at average PE multiples 20x.

“Considering the strong order book levels with specialised EPC capabilities, High growth focused areas like Mumbai and other metros and Marquee PE investors holding shares post IPO indicates value in the company,” the brokerage said in a report.
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