PKH Ventures IPO subscribed 45% on day 3; issue closes today

The Rs 379.35-crore initial public offering (IPO) of PKH Ventures continued to witness muted responses during the third and final day of the bidding process. The issue was subscribed only six per cent during the first day, while it ended the second day with a 31 per cent subscription.

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 1,16,03,100 equity shares, or 45 per cent, compared to the 2,56,32,000 equity shares offered for the subscription by 12.50 pm on Tuesday, July 04, 2023.

The quota for retail investors was booked 69 per cent whereas the allocation for non-institutional bidders (NIIs) fetched 1.04 times. The portion for qualified institutional bidders was booked about merely 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.

PKH Ventures is bringing the issue at a price band of Rs 140-148 per share at P/E multiple of 32 times on post issue FY23 PAT basis. The company has established a track record with visible growth through increasing third-party developer order books, government projects, government hotel development projects and forthcoming development projects, said Hem Securities.

"The company is in the process of completion of the acquisition of a NSE and BSE listed public company, Amar Remedies, a FMCG company in the ayurvedic products segment, through the IBC process. As Company has a diverse business Model therefore there are no direct comparable. Hence, we feel the valuation is high," it added with a 'neutral' rating on the issue.

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. Shares of PKH Ventures will be listed on both BSE and NSE on July 12, 2023.

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