Company’s order book is healthy which gives strong revenue visibility going forward. Looking after all, Hem Securities recommend subscribe the issue.
The public issue of Hyderabad-based Likhitha Infrastructure, an oil & gas pipeline infrastructure service provider, has witnessed good response from investors as it has subscribed 3.1 times on the second day of bidding, i.e. September 30.
The Rs 61.2-crore IPO has received bids for 1.58 crore equity shares against offer size of 51 lakh shares, the data available on the exchanges showed.
The retail investors are at the forefront in terms of bids as their portion set aside has seen 7.5 times subscription and that of non-institutional investors 3.19 times, while the reserved portion of qualified institutional buyers has subscribed 2.6 percent.
The IPO comprises a fresh issue of 51 lakh equity shares and after the public issue, promoters' shareholding in the company reduced to 74.11 percent.
The company will utilise fresh issue proceeds for working capital requirements and general corporate purposes.
The price band for the issue, which will close on October 1, has been fixed at Rs 117-120 per share.
"Company is bringing the issue at P/E multiple of approximately 12x at higher end of price band of Rs 117-120 per share on post issue FY20 PAT basis. Company has established track record in executing Pipeline Infrastructure projects and O&M Services has long standing relationship with customers," Hem Securities said.
"Also the company has shown strong financial performance with almost zero debt on its book. In addition to this company’s order book is healthy which gives strong revenue visibility going forward. Therefore, looking after all, we recommend subscribe the issue," the brokerage added.
Company is focused on laying pipeline networks along with construction of associated facilities; and providing operations & maintenance services to the City Gas Distribution (CGD) Companies in India.
Founded by Srinivasa Rao Gaddipati in 1998, Likhitha has been engaged in the same line of business for over two decades. Over the years, company have diversified the gamut of services being provided by company from cross-country pipeline projects (CCP); city gas distribution (CGD) projects to providing operation & maintenance (O&M) services to CGD companies.
Company's client base comprises of established players in the oil and gas industry, both in public and private sector. It has executed 10.75” OD x 69 Kms Petroleum Product Pipeline for the first ever trans-national cross-country pipeline of South-East Asia connecting India to Nepal, in 2019, for supply of petroleum products.
Its total order book as of July 2020 was approximately Rs 662.59 crore.Between fiscal 2015 and 2020, Likhitha Infrastructure's income from operations increased at a CAGR of 38.96 percent and profit 58.56 percent.