| Price | Lot Size | Issue Date | Issue Size |
|---|---|---|---|
| ₹ 380 to ₹ 401 | 37 | 01st Aug, 2024 – 05th Aug, 2024 | ₹ 1,252.66 Cr |
Company Overview
Established in 2022, Ceigall India Ltd. is one of the fastest-growing Engineering, Procurement and Construction (EPC) companies undertaking specialized structural work such as elevated roads, flyovers, bridges, railway over bridges tunnels, highways, expressways, and runways. Having over 20 years of experience in the industry, the company has gradually increased its execution capabilities in terms of the size of projects and has demonstrated expertise in the design and construction of various road and highway projects, including specialized structures across ten states in India. The company’s principal business divisions are EPC and Hybrid Annuity Model (HAM) projects. For these projects, the scope of services include design and engineering of the project, procurement of raw materials, project execution at the site with overall project management up to the commissioning of the projects. The company has completed over 34 projects in the roads and highways sector, including 16 EPC, one HAM, five O&M, and 12 Item Rate Projects. It has 18 ongoing projects, including 13 EPC projects and five HAM projects, including elevated corridors, bridges, flyovers, rail over-bridges, tunnels, expressways, runways, metro projects and multi-lane highways. In addition to undertaking Operation and Maintenance (O&M) activities by contractual obligations under the EPC/HAM concession agreements, the company has also undertaken independent O&M projects. Further, they have also undertaken in the past and continue to undertake sub-contracting projects.
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Repayment/ prepayment, in full or in part, of certain borrowings availed by the company and the Subsidiary, CIPPL;
- General corporate purposes.
Investment Rationale:
Demonstrates future success through its experience in executing specialized structures
Ceigall India is one of the fastest-growing engineering, procurement and construction (EPC) companies. The company has over 20 years of experience and expertise in the construction, development and execution of major road and highway projects, including expressways and specialized structures such as elevated roads and tunnels in various states of India, including Punjab, Haryana, Uttar Pradesh, Himachal Pradesh, Jammu and Kashmir and Bihar. The company’s primary focus is on road and highway projects and projects involving specialized structures, and it has helped them gain technical expertise in undertaking projects of different sizes and varying degrees of complexity. The consistent growth in order book has resulted from continued focus on road projects and specialized structures and the ability to bid and win new projects successfully. The company has also diversified its skill set, and order book across different business and geographical regions, enabling it to pursue a broader range of project tenders and maximize business volume and profit margins. Ceigall India intends to leverage its experience in the road and highway sector and effectively use assets, market position and ability to execute and manage multiple projects across geographies to grow portfolio in other sectors, leading to long-term growth visibility for the business.
Efficient business model to aid strong financial performance
The company’s growth is mainly attributable to its efficient business model, which involves careful identification of projects and cost optimization, resulting from executing the projects with optimum planning and strategy. This model has helped the company maximize its efficiency and profit margins. The company follows a strategic approach during the pre-bidding stage, which involves undertaking technical surveys and feasibility studies and analyzing the technical and design parameters and the cost involved in undertaking the project. The strategic approach during the pre-bidding stage enables the company to bid at competitive prices and helps to win projects successfully. Once the company wins a bid, its focus is to ensure high-quality construction during the execution stage of the project, as a result of which, the company can reduce maintenance and repair costs and, therefore, realize higher margins during the operation and maintenance stage of the project. The overall financial performance of the company is likely to remain strong on account of efficient utilization of resources and low working capital cycle, effective control over operational expenses, low emphasis on fixed assets, purchasing the majority of equipment used for construction on a buy-back basis, and high external credit rating leading to low finance cost.
Valuation
Ceigall India Ltd. is one of the fastest growing EPC companies in terms of three-year revenue CAGR, among the companies with a turnover of over Rs. 1,000 crores in FY24 and over 20 years of experience in the industry. Over the last two decades, the company has transitioned from a small construction company to an established EPC player, demonstrating expertise in the design and construction of various road and highway projects, including specialized structures across ten states in India. The company is well positioned to take advantage of industry tailwinds, with significant experience in roads and highways and selective expansion of other infrastructure. The roads and highways infrastructure sector has a high growth potential, and the company’s experience and track record in the construction business provide them with a competitive advantage in pursuing future opportunities. The Indian economy is on the path of USD 10.00 trillion of gross domestic product (GDP) by FY30, with the infrastructure sector expected to play a significant role with Rs. 52,962 billion investments in the infrastructure industry between FY24 and FY28. Ceigall India is well positioned to take advantage of industry tailwinds and has significant experience in roads and highways and selective expansion of other infrastructure. Considering the financial performance, the company’s Revenue/EBITDA/PAT grew at a CAGR of 43.9%/17.1%/3.3% during the FY22-24 period. As we advance, Ceigall India’s financial performance is driven by its continued focus on road projects and specialized structures, ability to successfully bid and win new projects, efficient business model, consistent growth in order book and preferred partner for NHAI projects. The company has recently joined hands with Delhi Metro for rail infra developments, which enables it to tap significant opportunities. The issue is valued at a P/E of 20.7x on the upper price band based on FY24 earnings, which is deemed fair. Therefore, we recommend a SUBSCRIBE rating for the issue.
What is the Ceigall India Ltd. IPO?
Ceigall India IPO is a book built issue of Rs 1,252.66 crores. The issue is a combination of fresh issue of 1.71 crore shares aggregating to Rs 684.25 crores and offer for sale of 1.42 crore shares aggregating to Rs 568.41 crores.
How to apply for the Ceigall India Ltd. IPO through Stoxbox?
To apply for the Ceigall India Ltd. IPO through StoxBox one can apply from the website and also from the app. Click here
When will the Ceigall India Ltd. IPO open?
Ceigall India Ltd. IPO is opening on 01st August 2024.
What is the lot size of the Ceigall India Ltd. IPO?
The Lot Size of Ceigall India Ltd. IPO is 37 equity shares
When is the Ceigall India Ltd. IPO allotment date?
The allotment Date for Ceigall India Ltd. IPO is 06th August 2024
When is the Ceigall India Ltd. IPO listing date?
The listing Date for Ceigall India Ltd. IPO is 08th August 2024
What is the minimum investment required for the Ceigall India Ltd. IPO?
In the Retail segment the minimum investment required is Rs. 14,837
What is the maximum investment allowed for the Ceigall India Ltd. IPO?
In the Retail segment the maximum investment requirement is Rs. 192,881
What are the risks associated with investing in the Ceigall India Ltd. IPO?
- The company’s business is primarily dependent on contracts awarded by governmental authorities. Any adverse changes in central, state, or local government policies may lead to foreclosed, terminated, restructured, or renegotiated contracts, which may have a material effect on the business and results of operations.
- All projects the company operates have been awarded primarily through a competitive bidding process. However, the company’s bids may not always be accepted. The company may not be able to qualify for, compete for, and win projects or identify and acquire new projects, which could adversely affect its business and results of operations.
- Any delay in acquiring private land or rights of way, evicting encroachments, obtaining environmental clearances for projects, or resolving associated land issues, though attributable to its customers, may adversely affect the timely performance of the company’s contracts and lead to disputes and losses.
When will the Ceigall India Ltd. PO shares be credited to my Demat account?
The Ceigall India Ltd. IPO be credited to the account on allotment date which is 07th August 2024
Where can I find the Ceigall India Ltd. IPO prospectus?
The prospectus of Sanstar IPO prospectus can be find on the website of SEBI, NSE and BSE
What are the important dates related to the Ceigall India Ltd.IPO?
| IPO Open Date | Thursday, August 1, 2024 |
|---|---|
| IPO Close Date | Monday, August 5, 2024 |
| Basis of Allotment | Tuesday, August 6, 2024 |
| Initiation of Refunds | Wednesday, August 7, 2024 |
| Credit of Shares to Demat | Wednesday, August 7, 2024 |
| Listing Date | Thursday, August 8, 2024 |
| Cut-off time for UPI mandate confirmation | 5 PM on August 5, 2024 |
