MC Exclusive: EPC firm Shivalaya Construction picks three investment banks for Rs 1,500 crore IPO

Founded in 1997 the company has implemented projects for several government departments

New Delhi-based roads and highways construction firm Shivalaya Construction Company Private Ltd has picked three investment banks to begin work on its initial public offering (IPO), aiming to raise as much as Rs 1,500 crore, people aware of the matter told Moneycontrol.

Founded in 1997, the company has implemented projects for several government departments like PWD of Haryana, Maharashtra, Jharkhand, Himachal Pradesh, Rajasthan, Delhi, Madhya Pradesh, Chhattisgarh, Manipur, Nagaland, Arunachal Pradesh and Mizoram as well as for NHAI and NBCC.

“The EPC (engineering, procurement and construction) company has picked three investment banks – IIFL, JM Financial and Axis Capital – to advise on the proposed IPO. The company plans to raise around Rs 1,500 crore, which will be used for repayment of debt as well as for funding ongoing and new projects, and working capital requirements,” said one of the people cited above.

“EPC companies are expected to do well, given the government’s focus on infrastructure capital expenditure that they have been doing and which is expected to continue in the upcoming Budget too,” the person added.

Emails sent to Shivalaya Construction Company did not elicit a response.

The EPC firm is currently constructing roads and highways in Jharkhand, Arunachal Pradesh, Mizoram, Haryana, Chhattisgarh, and the new Madhya Pradesh Bhavan in Delhi.

The financials

For FY23, the construction firm reported a revenue of Rs 2,188 crore, up from Rs 1,439.5 crore in the previous financial year. In FY23, the company reported a profit of Rs 293.11 crore, as against a profit of Rs 189.94 crore in the previous fiscal, as per data from the company’s filings with the Registrar of Companies.

As per a report by credit rating agency India Ratings, Shivalaya recorded a revenue of Rs 1,918.5 crore for the nine-month period ended December 31, 2023, with an Ebitda (earnings before interest, taxes, depreciation and amortisation) of Rs 322.8 crore.

“Shivalaya’s order book is dominated by the roads segment (98 percent of the orders), and the company secures all its orders from central government-backed counterparties. The company’s order book includes strong counterparties such as National Highways Authority of India (88.8 percent), National Highways and Infrastructure Development Corporation Ltd (8.6 percent) and Military Engineering Services (2.3 percent),” the rating agency said. Furthermore, Ind-Ra believes the order book will remain healthy over the near-to-medium term, due to the government’s strong focus on the construction of roads under Bharatmala Pariyogana. The agency expects the segmental concentration of the order book to persist over the medium to long term, given the company’s intent to maintain focus on its area of core competence, i.e. the roads segment.