The public offer of GR Infraprojects continued to witness overwhelming response from investors given the expected infrastructure boost in coming years and attractive valuations compared to peers, as it subscribed 5.75 times on July 8, the second day of bidding.
The offer has received bids for 4.67 crore equity shares against IPO size of 81.23 lakh equity shares, the subscription data available on the exchanges showed.
The retail investors have put in bids 7.49 times their reserved portion and non-institutional investors 6.31 times their portion set aside.
A part set side for qualified institutional buyers has subscribed 2.78 times and that of employees 75 percent.
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The road sector contractor is planning to raise Rs 963 crore through its public issue which comprises a complete offer for sale by selling shareholders. The company already garnered Rs 283 crore from anchor investors on July 6, a day ahead of issue opening, at a higher end price band of Rs 828-837 per share.
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"Assuming a 15 percent PAT CAGR over FY21-FY23 (on standalone basis) the issue at its upper price band is valued at around 7x to its FY23E EPS (adjusted for investment in hybrid annuity model (HAM) projects). This is at an attractive valuation as compared to peers, hence we assign a subscribe rating to the issue," said Yes Securities.
GR Infraprojects, as at the end of March 2021, it is sitting on a robust order book of around Rs 19,025.8 crore with book to bill ratio of 2.6x to its FY21 revenue. This gives a good revenue visibility for the coming years.
Also Read the Moneycontrol's Exclusive Research Note on GR Infraprojects
GR Infra has a strong integrated business model. As on March 2021, its equipment base comprised of over 7,000 construction equipment and vehicles. Its inhouse integrated model reduces dependence on third party suppliers for key raw materials, construction equipment and other products and services required in the development and construction of its projects.
The total investment done by the company as of March 2021 in all its operational and under construction build-operate-transfer (BOT) & HAM projects was Rs 1,300 crore and balance to be done is Rs 1,200 crore. "The company also has very low debt with net debt to equity of 0.2x. Hence, the company is well placed to meet its funds requirement for growth with low debt and ready monetizable assets," said Yes Securities.
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