Vishnu Prakash R Punglia IPO opens today; 10 key things to know

Vishnu Prakash R Punglia IPO opens today

Rajasthan-based Vishnu Prakash R Punglia is the sixth company to launch an initial public offering in August.

Here are 10 key things to know before making an application for the issue:

1) IPO Date

The offer opened for subscription on August 24, i.e. today, and will close on August 28.

2) Price Band

The price band for the issue has been fixed at Rs 94-99 per share.

3) Offer Size

The public issue of 3.12 crore equity shares will fetch the construction company Rs 308.88 crore, at upper price band.

The firm already raised Rs 91.77 crore from several anchor investors on August 23, including Kotak Mahindra Life Insurance Company, Quant Mutual Fund, Societe Generale, Max Life Insurance Company, Copthall Mauritius Investment, and BNP Paribas Arbitrage.

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This issue includes a reservation of up to 3 lakh equity shares for company's employees who will get those shares at a discount of Rs 9 per share to the final offer price.

The maiden public issue comprises only a fresh issue by the company.

4) Objectives of Public Issue

Hence, the entire net issue proceeds, excluding offer expenses, will go to the company. Of the total proceeds, Rs 62.2 crore will be utilised for the purchase of equipment and machineries, and Rs 150 crore will go towards working capital requirements. And the remaining money will be used for general corporate purposes.

5) Lot Size

The application can be made for a minimum 150 equity shares and in multiples of 150 shares thereafter. Retail investors can invest a minimum of Rs 14,850 for a lot (150 shares x Rs 99), and their maximum investment will be Rs 1,93,050 for 13 lots (1,950 shares) as they are allowed to invest up to Rs 2 lakh in IPO.

High networth individuals in the Rs 2 lakh to 10 lakh category can make a minimum investment of Rs 2,07,900 for 14 lots (2,100 shares), and their maximum application size will be worth Rs 9,94,950 for 67 lots (10,050 shares).

The company has reserved half of the offer size for qualified institutional buyers, 15 percent for high networth individuals, and the remaining 35 percent for retail investors.

6) Company Profile

Vishnu Prakash R Punglia is an integrated engineering, procurement and construction (EPC) company with experience in design and construction of various infrastructure projects. Its business operations are divided into four categories of projects - water supply, railway, road, and irrigation network.

It has in-house teams for projects from design to completion along with a fleet of 499 construction equipment and vehicles, which reduces its dependency on third parties for key materials.

It is a focused player in water supply projects (WSPs) and has executed more than 75 WSPs to date. Also, it has 38 WSPs under execution.

As of July 15, 2023, it has an order book of Rs 3,799.53 crore. With a client base in various departments of the Union and state governments, it has executed more than 85 projects to date, and has 51 ongoing projects in 9 States and 1 Union Territory, forming part of the order book.

7) Financials

Led by promoter Vishnu Prakash Punglia, the Jodhpur-based construction company has strong numbers in the past years, with revenue from operations growing at a CAGR (compounded annual growth rate) of 55.10 percent during FY21-FY23 to Rs 1,168.4 crore in FY23, with the help of a robust order book across different business segments and geographical regions. Net profit increased at a CAGR of 118.52 percent during the same period to Rs 90.64 crore in FY23.

The operating numbers, too, were strong with EBITDA (earnings before interest, tax, depreciation and amortisation) growing 80.2 percent on-year to Rs 156.6 crore in FY23 with a margin expansion of 234 bps at 13.4 percent during the same period.

However, the debt on its books has increased considerably in the same period to Rs 250.4 crore in FY23, up from Rs 176.6 crore in FY22 and Rs 110.8 crore in FY21. As a result, the finance cost jumped to Rs 30.2 crore, from Rs 24.07 crore, and Rs 17.5 crore during the same financial years.

8) Promotors and Management

Promoters including Vishnu Prakash Punglia, Manohar Lal Punglia, Sanjay Kumar Punglia, Kamal Kishor Pungalia and Ajay Pungalia hold 90.45 percent stake in the company and the remaining 9.55 percent is held by public shareholders

Vishnu Prakash Punglia is the Chairman and Whole-time Director on the Board, while Manohar Lal Punglia is the Managing Director.

Sanjay Kumar Punglia is the Whole-time Director and Chief Executive Officer, while Ajay Pungalia, and Kamal Kishor Pungalia are the Whole-time Directors on the Board.

Sarfaraz Ahmed is the Chief Financial Officer of the company, while Neha Matnani is the Company Secretary and Compliance Officer.

9) Risk Factors

a) There are certain outstanding litigations involving the company, which, if determined adversely, may affect business operations and reputation.

b) Its business is concentrated in Rajasthan state.

c) Free operating cash flow to debt ratio as on March 2023 and March 2022 is negative. Further increase in debt without sustained free cash flows may adversely impact financial condition and growth of the company.

d) The company has reported negative cash flows in the past from its operating, investing and financing activities. Sustained negative cash flow could impact growth and business.

e) The business is working capital intensive involving relatively long implementation periods. It requires substantial financing for business operations.

f) It operates in an extremely competitive industry and failure to successfully compete could result in loss of one or more of significant customers and may adversely affect the business.

10) Listing Date

The company in consultation with the NSE will finalise the basis of allotment of shares by August 31, and the equity shares will be transferred to demat accounts of successful investors by September 4. Unsuccessful investors will get their refunds in bank accounts by September 1.

Vishnu Prakash R Punglia will debut on the BSE and NSE on September 4.

IPO shares were available at a premium of 40-50 percent in the grey market, over the upper price band, analysts said on anonymity. The grey market is an unofficial platform for IPO shares which can be bought and sold till the listing.

Choice Capital Advisors and Pantomath Capital Advisors are the merchant bankers to the issue, while Link Intime India is the registrar.