Vishnu Prakash IPO subscribed over 2.2x on Day 1; NII & retail books sail through

The Rs 309-crore initial public offering (IPO) of Vishnu Prakash R Punglia saw a strong response from the investors during the initial few hours of the bidding process on the first day. The issue kicked off for subscription on Thursday, August 24.

Vishnu Prakash R Punglia is selling its shares in the range of Rs 94-99 apiece during the three-day bidding process and investors can make a bid of a minimum of 150 equity shares and its multiples thereafter. The issue is entirely a fresh offering of up to 3.12 crore equity shares.

According to the data, the investors made bids for 4,82,55,300 equity shares, or 2.20 times, compared to the 2,19,30,000 equity shares offered for the subscription by 2.15 pm on Thursday, August 24, 2023. The issue closes for subscription on Monday, August 28.

The portion of retail investors sailed through with a subscription of 3.07 times, while the allocation for non-institutional bidders fetched 3.18 times bids. The employee reservation for subscribed 1.02 times but the quota for qualified institutional bidders (QIBs) was booked merely one per cent at the same time.

Incorporated in 1986, Jodhpur-based Vishnu Prakash R Punglia is engaged in the business of designing and constructing infrastructure projects for the central and state governments, autonomous bodies, and private bodies across nine states and one union territory in India.

The company's principal business operations are broadly divided into four categories namely water supply projects, railway projects, road projects and irrigation network projects. It has been accredited with various registrations as a contractor with various departments and agencies.

A majority of brokerages are positive on the issue and have suggested subscribing to it, citing its robust order book, strong execution, healthy financial, growth prospects and attractive valuations for the investors. However, dependency on government projects, high working capital and increasing competition are the key challenges.

At the upper price band, the issue is available at a P/E of 13.6 times(FY23), which appears to be fairly priced compared to its peers. The current order book stands at Rs 3,800 crore as of July 2023 with an order book to sales ratio of 3.3 times which provides better revenue visibility ahead, said Geojit Financial Services.

"The consistent topline growth and operational efficiencies, experience of over three decades in the industry, strong support from government orders, healthy order pipeline, and new initiatives from Govt. of India to boost the sector will position the company well for growth," it added with a 'subscribe' rating for the issue on a short- to medium term basis.

A day before the issue, Vishnu Prakash R Punglia mobilised Rs 91.77 crore by allocating 92.7 lakh shares at Rs 99 apiece to 13 anchor investors on Wednesday, the company said. Quant Mutual Fund, Max Life Insurance, Kotak Mahindra Life Insurance, Societe Generale, Minerva Emerging Opportunities Fund, Copthall Mauritius Investment, and BNP Paribas Arbitrage participated in the anchor book.

The company has reserved 50 per cent of equity shares for qualified institutional bidders, while non-institutional investors will have 15 per cent of reservation for them. Remaining 35 per cent shares will go to the retail investors of the company.

Their growth is evident in their earnings improvement, which grew at a CAGR of 118.5 per cent to Rs 90.6 crore. The company posted a 2-year revenue CAGR of 55.1 per cent to Rs 1,168.4 crore on account of strengthening order book and execution capacity. The order pipeline for the segment in which it operates is robust, said Indsec Securities and Finance.
 
"The company’s primary WSP business is witnessing tailwinds, due to several contracts tendered by government agencies. Further, the huge order wins of Rs 380 crore in Railways, augurs well for future order biddings," it added with a 'subscribe' recommendation for the issue.

Choice Capital Advisors and Pantomath Capital Advisors are the book running lead managers and Link Intime India has been appointed as the registrar to the issue. Shares of the company are proposed to be listed on both BSE and NSE tentatively on September 5, 2023.


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