Road construction company GR Infraprojects made a strong debut on D-Street, opening for trade on July 19 at over 100 percent premium over its listing price.
After more than doubling investor wealth at opening, the stock climbed as high as Rs 1838 during the day; a 119.6 percent upside over its issue price of Rs 837. At the time of writing this copy, GR Infraprojects was quoting at Rs 1,740, up 107 percent on the BSE.
The listing was ahead of analysts' expectations, as well as grey market premium, which pegged the stock to open at around 60 percent premium over the issue price.
Given the stellar debut, experts advise short-term investors to book profits. However, long-term investors can hold the stock. New investors, or existing investors looking to add to their position, should wait for a more opportune time, they say.
"We advise allotted investors to look for booking profits and if investors wish to add GR Infra on listing day, they can wait and watch for better pricing post listing," Prashanth Tapse, VP Research at Mehta Equities told Moneycontrol.
Gaurav Garg, Head of Research at CapitalVia Global Research also advises that investors should book their listing gains or wait for the price to drop to accumulate the stock at lower levels.
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GR Infrastructure is an integrated road EPC company with 25 years of experience in designing and constructing various road/highway projects across 15 states in India. Recently, the company diversified into railway sector projects.
Its principal business operations include civil construction activities under EPC services; development of roads, highways under build-operate-transfer (BOT) & hybrid-annuity-mode HAM mode; processing of bitumen, manufacturing of thermoplastic road-marking paint, electric poles & road signage and fabrication & galvanization of metal crash barriers.
As of March 2021, the company had an order book of Rs 19,026 crore, which is around 2.7x of the construction services income.
On the financial front, GR Infra reported a robust set of numbers over FY18-21. The company reported a 33.5 percent CAGR rise in consolidated topline and 32.2 percent CAGR increase in profit during FY18-FY21 on the back of higher business from the civil construction services
Astha Jain, Senior Research Analyst at Hem Securities recommends booking profit partially on the listing day.
"The company has posted strong financial performance with healthy balance sheet status. Also, the company has a healthy order book which gives strong revenue visibility going forward. As the company strives to maintain robust financial position and low debt levels along with an emphasis on strong balance sheet, it enables it to pursue future opportunities for growth and seems to be a good bet for the long term," she said.
Rajnath Yadav, Research Analyst at Choice Broking, also recommends short term investors to book profit. However, long term investors can remain invested considering the company's historical performance and the government's focus on the road sector in general
GR Infrastructure raised Rs 963 crore through its public issue last week, which was a complete offer for sale. So the entire issue proceeds will go to the selling shareholders.
The company has three manufacturing facilities for key raw materials and also a fabrication & galvanization. Moreover, the company has over 7,000 construction equipment and vehicles in the equipment base. All this enables it to be less dependent on third party equipment providers and also efficiently manage its project execution schedules.
"Given the extent of capital commitment and outlay required to augment and maintain the road network over the next few years, GR Infra is well-placed to tap this opportunity. We believe road infra is an important pillar in India's speedy economic recovery and one would hope that the government's budgetary commitment to strengthening roadway infrastructure is accompanied by attractive opportunities for companies like Dilip Buildcon, Ashoka Buildcon, GR Infraprojects and Sadbhav Infrastructure," said Prashanth Tapse.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.