Thursday, September 13, 2018

IPO ANALYSIS : Ircon International Limited - Solid fundamentals- Invest

Image result for ircon


Issue Details :

Issue opens  / closes on
17-09 /19-09-2018
Issue size
99,05,157 equity shares
Face Value
Rs 10
Price
Rs 470-475 / discount of Rs 10 for retail shareholders.
Business
Specialized construction - Railways /highways.
Promoters
Govt of India
Listings
Bse, Nse
BRLM
IDBI Capital Markets & Securities Limited, Axis Capital Limited, SBI Capital Markets Limited.
Registrar
Karvy

BUSINESS :

Ircon is  an integrated Indian engineering and construction company, specializing in major infrastructure projects, including, railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV substations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other
infrastructure activities.
It provides EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for
various infrastructure projects.

In 2016, Ircon was  ranked number 248 in the list of the top 250 international
contractors by Engineering News Record  of the United States.


OBJECTS OF THE OFFER :

(i) to carry out the disinvestment of upto 9,905,157 Equity Shares, including Employee Reservation Portion, by the Selling Shareholder constituting 10.53% of the Company’s pre-Offer paid up Equity Share capital our Company.

(ii) to achieve the benefits of listing the Equity Shares on the Stock Exchanges. The Company will not receive any proceeds from the Offer and all proceeds shall go to the Selling Shareholder.


FINANCIALS :  ( Rs in Crores, except EPS)




March 2018
March 2017
March 2016
Revenues
4214
3301
2908
Equity
94.05
98.98
19.79
Net profit
412
384
393
EPS
42
39
40


RISKS :

1.Business and revenues are substantially dependent on construction and infrastructure projects undertaken or awarded by government authorities and other entities funded by the government.

2. Railway sector projects contribute approximately 87% of the Order Book as of March 31, 2018.

QUALITATIVE FACTORS

  1. Business operates in diverse sectors covering many countries.
  2. Excellent execution track record through strong operating systems and controls.
  3. Strong financial performance and credit profile.
  4. Visible growth through robust order book and steady execution.

VALUATION AND RECOMMENDATIONS :

The offer is made around 12 PE on its FY18 earnings. Company's fundamentals are strong, although there is over dependence on Central Government for business. There is discount of Rs 10 for retail investors. Invest for listing gains.
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