Ceigall India IPO - Outlook, Strategies, Financials, Risks And More: DRChoksey

DRChoksey Research Report

Outlook and valuation

Indian infrastructure sector, particularly road construction, remains a vital part of the country's economic framework, with substantial growth and investment projected over the next few years. Companies like Ceigall India Ltd. are well-positioned within this competitive landscape, leveraging their experience and broad project portfolio to capitalize on ongoing and future infrastructure development initiatives.

The company's robust growth trajectory, marked by a 50.13% three-year revenue CAGR and a significant increase in its order book, showcases its strong market position and operational excellence. With an extensive track record in executing complex infrastructure projects and a diversified portfolio that spans roads, highways, railways, and tunnels, the firm is well-positioned for continued expansion.

Strategic relationships with key entities like NHAI and ongoing projects with high-profile clients further enhance its revenue visibility and long-term prospects. Given its efficient business model, strong financial metrics, and proven project management capabilities, the company is poised to sustain its growth momentum in the coming years.

Ceigall enjoys superior return ratios versus its with ROE at 24%, additionally the PAT margin is relatively higher compared to its peers. Considering these factors, we assign a Subscribe rating to this stock as the company is attractively valued 23 times relative to its FY24 EPS.

Ceigall India Ltd. launched its initial public offering today and the offer will close on Aug. 05. The company has set a price band of Rs 380-401 per share, with a face value of Rs 5 each. The minimum lot size for bidding will be 37 shares.

The Rs. 1253 crore IPO comprises of fresh issue of 1.71 crore shares aggregating to Rs 684.25 crore and an offer-for-sale of 1.42 crore shares aggregating to Rs 568.41 crore by promoters and investor selling shareholder.

Object of the offer

• Purchase of equipment.

• Repayment/ prepayment of certain borrowings.

• General corporate purposes.

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