Vishnu Prakash R Punglia offers bumper listing gains: What should you do now?

During the book building, the issue generated enthusiastic response from investors.

Bumper opening gains for investors of Vishnu Prakash R Punglia (VPRPL), a infrastructure company working on water supply projects, have left analysts divided on the near-term future outlook for the stock.

Vishnu Prakash R Punglia debuted on the bourses on September 5 at 66.7 percent premium to the issue price of Rs 99. The shares started trading on the NSE at Rs 165 and at Rs 163.30 on the BSE.

Some analysts contend that after hefty gains, valuations have caught up. Though others counter that the industry in which the company operates has a strong growth potential and hence the stock makes sense for a long-term investment.

“We expected the issue to list at a handsome premium on Tuesday on account of its strong order book, extensive track record of executing a range of projects, good financial performance and attractive valuations,” said Parth Shah, Research Analyst at StoxBox. “We would advise investors who have received allotment to book profits on the opening day and wait for dips for any fresh entry.”

During the book building, the issue generated enthusiastic response from investors. It drew a massive 87.82 times subscription, backed by all categories of investors. Qualified institutional buyers and high net-worth individuals (non-institutional investors) were aggressive among them, applying for 171.69 times and 111.03 times the allotted quota, respectively.

This enthusiasm carried on to the listing day as well.

“Investors allotted shares can consider holding them for the long term,” said Anita Gandhi, Director of Arihant Capital Markets. “Buying more shares on the listing day could be a good option if the stock is available at or near the issue price, as it could be an opportunity to add to their portfolio. However, individual investment decisions should consider market conditions and personal financial goals.”

As on July 15, 2023, the company had an order book of Rs 3,800 crore which is 3.3 times its FY23 revenue, with water supply projects comprising 78 percent and the Rajasthan's contribution at 62 percent to the order book. The company also has a presence in the railways, roads and irrigation segments. This gives revenue visibility for the next three years, analysts pointed out.

Revenue from operations recorded a CAGR (compounded annual growth rate) of 55.10 percent during FY21-FY23 to Rs 1,168.4 crore in FY23, while its net profit averaged a growth rate of 118.52 percent to Rs 90.64 crore in FY23.

Prashanth Tapse, Senior VP-Research at Mehta Equities, said that looking at long-term rationales, it is recommended that allotted investors hold onto their investment considering its high growth potential.

The Rajasthan-based company has raised Rs 308.88 crore from the IPO that comprised only a fresh issue. Thus, the entire issue proceeds, excluding IPO expenses, will be utilised for the purchase of equipment and machinery, working capital requirements, and general corporate purposes.

Sunil Shankar Matkar also contributed to this story. 

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