PKH Ventures IPO subscribed 20% on second day of bidding so far

The Rs 379.35-crore initial public offering (IPO) of PKH Ventures continued to witness muted responses during the second day of the bidding process. The issue was subscribed only six per cent during the first day of the bidding as investors aggressively bid for the issues (now closed) of Cyient DLM and ideaForge Technology.

PKH Ventures is selling its shares in the range of Rs 140-148 apiece, with a lot size of 100 equity shares until July 4. The issue includes issuance of 1,82,58,400 fresh equity shares amounting to 270.22 crore, while an offer-for-sale (OFS) of up to 73,73,600 equity shares amounting to Rs 109.13 crore by its promoter Pravin Kumar Agarwal, the sole selling shareholder.

According to the data from the BSE, the investors made bids for 51,35,800 equity shares, or only 20 per cent, compared to the 2,56,32,000 equity shares offered for the subscription by 12.45 pm on Monday, July 03, 2023.

The quota for retail investors was booked 30 per cent whereas the allocation for non-institutional bidders (NIIs) fetched 29 per cent bids. The portion for qualified institutional bidders was booked about 11 per cent as of the same time. Interestingly, the company did not have any portion for anchor investors.

Incorporated in 2000, PKH Ventures is engaged in the business of construction and development, hospitality, and management services. PKH Ventures executes civil construction works for third party developer projects through its Subsidiary and construction arm, Garuda Construction.

Analysts tracking the stock remain mixed on the issue. A few brokerage firms have suggested bidding for the issue citing diversified business models and operations in growing sectors. However, others have suggested to avoid the issue citing lack of clear focus and rich valuations.

"The debt has increased significantly to Rs 74.8 crore for the nine months ended 31 December 2022 compared to Rs 48.6 crore posted in FY22, whereas the revenue has shown a degrowth in the last three years. On the upper end of the price band, the issue will be valued at 24.8 times of annualized FY23 earnings which we believe is richly valued," said Stoxbox with an 'avoid' tag.

For the nine-months ended on December 31, 2022, the company reported a net profit of Rs 28.64 crore with a total revenue at Rs 155.03 crore. The company clocked a net profit at Rs 40.52 crore with a total revenue at Rs 245.41 crore for the financial year ended on March 31, 2022.

PKH Ventures is in the diversified business of construction and development, hospitality, and management services. Currently, it has multiple projects in the pipeline, especially the government-awarded projects. The company has experienced promoters, and it has reported decent financials as well, said Swastika Investmart in its report.

"However, it has experienced negative cash flows in the past. Also, the company has worked on very few projects till now, so it has limited or almost zero relevant experience for the upcoming projects. Coming to the valuation, the issue is valued at a P/E of around 33 times. Considering all the factors, we will recommend only high-risk investors subscribe this IPO," it said.

The company has reserved 50 per cent of the offer for qualified institutional buyers (QIBs), while non-institutional investors (NIIs) will get the remaining 15 per cent of the issue. Retail investors will get the remaining 35 per cent for the portion of the issue.

IDBI Capital Markets and Securities is the sole book-running lead manager to the issue, while Link Intime India has been appointed as the registrar for the issue. Shares of PKH Ventures will be listed on both BSE and NSE on July 12, 2023.

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