Ceigall India IPO Opens Today: GMP Up; Should You Bid? Brokers Call Here

5 minutes of reading Last updated: August 01, 2024 | 10:23 AM IST

Ceigall India IPO starts today: The three-day subscription window for Ceigall India’s Initial Public Offering (IPO) opens for public subscription today. The company’s shares are trading at a premium of Rs 89 or 22.19 per cent in the grey market ahead of its opening. This GMP indicates strong demand for Ceigall India’s IPO.

Brokerages including Anand Rathi Research Team, Reliance Securities, SBI Securities and Swastika Investmart expressed mostly positive views on the public issue.

Ceigall India IPO Details

Ceigall India aims to raise Rs 1,252.66 crore from the IPO, comprising fresh issue of 17,063,640 equity shares worth Rs 684.25 crore and offer for sale of 14,174,840 equity shares of a face value of Rs 5 each, aggregating to Rs 568.41 crore.

The public issue of Ceigall India shares is available at a price range of Rs 380-401 per share with a lot size of 37 shares, which allows investors to bid for a minimum of 37 shares and multiples thereof.

The basis of allotment of shares for the Ceigall India IPO is likely to happen on Tuesday, August 6, 2024. The shares of Ceigall India are expected to be listed on the NSE and SME on Thursday, August 8, 2024. For the IPO, Ceigall India has appointed Link Intime India as the registrar while ICICI Securities, JM Financial and IIFL Securities are acting as the lead book-running managers.

Ceigall India Finance

Ceigall India’s financials showed an increase in revenue from Rs 1,134 crore in FY22 to Rs 3,029 crore in FY24, registering a 63 per cent CAGR. The company’s net profit at auction (PAT) also rose to Rs 304.3 crore in FY23 from Rs 167.3 crore in FY22 and Rs 125.9 crore in FY22. Ceigall India’s PAT margin was 11.1 per cent in FY24, compared to 8.1 per cent in FY23 and 10 per cent in FY22. The company’s net worth was around Rs 906.4 crore in FY24, compared to Rs 593.1 crore in FY23 and Rs 431.3 crore in FY22.

Ceigall India IPO Target

Ceigall India intends to utilise the net proceeds from the IPO to repay/prepay in full or in part the borrowings raised by the company and also for purchase of equipment and general corporate purposes.

Is it worth signing up for Ceigall India IPO?

Here’s what brokerages said about Ceigall India’s IPO:

Anand Rathi Research Team – Subscribe for Long Term

Anand Rathi’s research team noted that the company has a large order book spread across business sectors and geographies, which allows it to participate in a wider range of project tenders and maximize sales volume and profit margins.

“The company’s P/E ratio stands at 22.9 times on the basis of its FY24 earnings, with a market capitalisation of Rs 6,985.4 crore post issue of common shares and a market capitalisation to sales ratio of 2.3 times its FY24 earnings. Considering these factors, we recommend a ‘Subscribe – Long-Term’ rating for the IPO,” said Anand Rathi’s research team.

Reliance Securities – Subscribe

Brokerage firm Reliance Securities highlighted that Ceigall India is strategically bidding for projects, leveraging its experience in the roads and highways sectors to expand its portfolio into other sectors like HAM and BOT. The company follows an asset-light model, ensuring better fixed asset turnover ratios, and has strong relationships with lenders, which enables it to raise timely finance at competitive terms when required.

“We believe that Ceigall India will continue to maximise revenues with multiple projects in hand and enhance profit margins and return ratios over the next few years. Hence, we recommend ‘Subscribe’ on the issue,” Reliance Securities said.

SBI Securities – Subscribe for Long Term

According to SBI Securities, Ceigall India boasts of one of the best return ratios among its listed peers, thanks to its efficient business model. “However, considering the company’s persistently negative cash flow from operations, high level of debt and geographical concentration in the states of Punjab, UP and J&K (87 per cent of revenue in FY24), the business model appears to be associated with relatively higher risk as compared to its listed peers. Hence, the issue can be considered as a slightly risky bet; hence, we recommend investors to subscribe to this issue for the long term,” SBI Securities said.

Swastika Investmart – Subscribe for long term

Ceigall India is emerging as a fast-growing EPC player with a strong track record in specialised infrastructure projects, said Shivani Nyati, Head of Wealth at Swastika Investmart. Nyati continued, “Its strong order book, efficient business model and proven project execution capabilities position the company for further growth. The company’s consistent financial performance, with rising top and bottom lines, further strengthens its position in the sector. However, significant contingent liabilities, dependence on government contracts, high working capital requirements and intense competition pose key challenges.”

“The IPO is trading at a fully valued P/E of 20.7x. While the company’s growth prospects are promising, the aforementioned risks warrant a cautious approach. Given these factors, a long-term perspective is essential for investors considering this IPO,” Nyati said.

First published: August 01, 2024 | 10:23 AM IST