Infrastructure company Vishnu Prakash R Punglia (VPRPL) is expected to start the first day on the bourses on September 5 with at least 50 percent premium over the issue price of Rs 99 per share, said experts citing the robust IPO subscription numbers, increasing focus on the infrastructure space by the government, strong order book and reasonable valuations.
The maiden public issue closed last week with a massive 87.82 times subscription, backed by all categories of investors. Qualified institutional buyers and high networth individuals (non-institutional investors) were aggressive amongst them, buying 171.69 times and 111.03 times the allotted quota.
Retail investors also lent great support to the issue, buying 32.01 times the portion set aside for them and employees 12.97 times.
"Considering robust demand response by investors in all categories, we expect 50 percent and above listing gain from its issue price of Rs 99 apiece," Prashanth Tapse, research analyst and senior VP research at Mehta Equities, said.
He believes the premium listing is justified on the back of an infrastructure sector focused business model supported by the government’s long-term goals along with 3.5 years of revenue visibility and investor-friendly IPO valuations, which give room for strong listing gains.
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Parth Shah, research analyst at StoxBox, also expects the issue to deliver handsome gains on the listing day. "We expect the issue to list at a premium of around 60 percent on Tuesday on account of a strong order book, extensive track record of executing a range of projects, good financial performance and attractive valuations,” Shah said.
VPRPL shares have also been getting healthy demand in the grey market as it traded with around 60 percent premium, analysts said on anonymity. The grey market is an unofficial platform for trading in IPO shares till the listing.
The Rajasthan-based company with a market cap of Rs 1,234 crore (at Rs 99 per share), has raised Rs 308.88 crore via the IPO that comprises only a fresh issue. Hence, the entire issue proceeds, excluding IPO expenses, will be utilised for the purchase of equipment & machinery, working capital requirements, and general corporate purposes.
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Led by promoter Vishnu Prakash Punglia, the EPC company mainly focused on water supply projects, has recorded strong financial performance in the past fiscal years with the help of a robust order book across different business segments and geographical regions.
Revenue from operations grew at a CAGR (compounded annual growth rate) of 55.10 percent during FY21-FY23 to Rs 1,168.4 crore in FY23 while net profit increased at a CAGR of 118.52 percent during the same period to Rs 90.64 crore in FY23. The company also has a presence in railways, roads and irrigation segments.
"With strong industry tailwinds likely to persist in water related projects, railways and roads, we believe Vishnu Prakash Punglia is a decent proxy play on the infrastructure industry offering high growth with good profitability," Nirmal Bang said.
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As on July 15, 2023, it has an order book of Rs 3,800 crore which is 3.3x its FY23 revenue, with water supply projects comprising 78 percent and the Rajasthan state's contribution at 62 percent to the order book.
"VPRPL is a well-established company that focuses on water supply projects. It is benefiting from various government initiatives in the infrastructure sector. The business has a history of completing projects successfully, and it has seen significant expansion through a robust order book. Also, investors responded enthusiastically to this IPO," Anubhuti Mishra, equity research analyst at Swastika Investmart, said.
Based on these factors, Mishra expects a strong return on the VPRPL listing.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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