Ceigall India shares may debut with moderate premium on August 8

The Ludhiana-based engineering, procurement and construction (EPC) company has raised Rs 1,252.66 crore through its maiden public issue comprising a fresh issue of Rs 684.25 crore, and an offer-for-sale of Rs 568.4 crore by promoters.

Ceigall India, the infrastructure construction company, will list on the bourses on August 8. Analysts expect the stock to open with moderate gains of around 5 percent over the issue price of Rs 401 per share.

Even the grey market is not indicating any strong debut for the stock. Shares were available at around 3-6 percent premium in the grey market, an unofficial platform for trading in IPO shares till the listing, the market observers said.

The Ludhiana-based engineering, procurement and construction (EPC) company has raised Rs 1,252.66 crore through its maiden public issue comprising a fresh issue of Rs 684.25 crore, and an offer-for-sale of Rs 568.4 crore by promoters. The price band for the issue, which was subscribed 13.78 times during August 1-5, was Rs 380-401 per share.

Qualified institutional buyers topped the buying list, picking 31.5 times the allotted quota, followed by non-institutional investors, and retail investors who bought 14.42 times and 3.77 times the portions set aside for them.

Considering the market mood and the subscription figures, Prashanth Tapse, Senior VP Research at Mehta Equities believes Ceigall India would witness a listing gain in the range of 5-10 percent on the issue price.

According to Amit Goel, co-founder & chief global strategist at Pace 360, the listing price is expected to be around Rs 425-430 per share, resulting in a listing gain of around 6 percent.

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Ceigall India is in the business of infrastructure and construction, specializing in structural projects including elevated roads, flyovers, bridges, railway overpasses, tunnels, highways, expressways, and runways. For the stated periods, it has shown impressive CAGR growth in both its top and bottom lines.

Profit during the fiscal 2024 at Rs 304.3 crore increased by 82 percent compared to Rs 167.3 crore net recorded in the previous year. Revenue from operations during the same period increased by 46.5 percent to Rs 3,029.4 crore from Rs 2,068.2 crore.

The EPC business contributed 66 percent to total revenue from operations during the fiscal 2024, and HAM (Hybrid Annuity Mode) projects accounted 26.3 percent of the revenue.

"The stock is expected to list at a premium of approximately 8 percent over its issue price," Parth Shah, research analyst at StoxBox said, while Narendra Solanki, Head Fundamental Research - Investment Services at Anand Rathi Shares and Stock Brokers believes the listing should be at par or marginal premium.

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With more than 20 years of experience in the roads and highways infrastructure sector, the company has completed over 34 projects in the sector. Currently, it has 18 ongoing projects, including 13 EPC projects and five HAM projects. As of June 2024, its order book stood at Rs 9,470.8 crore which included 80.3 percent of projects from NHAI.

"The company has a strong order book spread across various business sectors and geographical regions allowing them to pursue a wider range of project tenders, thereby maximizing their business volume and profit margins," Narendra Solanki said.

Ceigall India that compares with KNR Constructions, PNC Infratech, G R Infraprojects, HG Infra Engineering, and J Kumar Infraprojects traded at P/E ratio of 22.9 times based on its FY24 earnings, with a market capitalization of Rs 6,985.4 crore after the issuance of equity shares and a market cap-to-sales ratio of 2.3 times its FY24 earnings.

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