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Should you subscribe to Capacit'e Infraprojects IPO?

Nirmal Bang | 14 Sep, 2017  | Follow Author | Add to my Favourites 
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Capacit’e Infraprojects Ltd - IPO Note

Price Band: Rs.245– Rs.250

Issue Date: 13th  – 15th   Sep

Recommendation: Subscribe

 


Background


Capacite Infraprojects Ltd (CIL) is construction company mainly focused on residential, commercial and institutional building segment. CIL provide end-to-end construction services for residential, mutli-level car parks, corporate office and buildings for educational, hospitality and healthcare purposes.


 

Investment Rationale:


a)   Strong order book with marquee client base offering higher revenue visibility


b)  Ownership of modern system formworks and other core assets


c)   Strong financial performance with lower debt equity ratio


d)  Expanding their presence in cities with high growth potential


e)  Experienced promoters and management teams


 

Details & Objects of the Issue:


The public issue of Capacite Infraprojects ltd consists of fresh issue of Rs 400 cr.


The object of the issue is


a)            Working capital requirements – Rs 250cr


b)            Purchase of capital assets – Rs 52cr


c)            General corporate purposes-Rs.98Cr


 


Valuation and Recommendation:


Over FY13- FY17 the company’s revenues have grown at a CAGR of 75% though EBIDTA has grown at a CAGR of 114%.  EBIDTA margins improved from 6.8% in FY13 to nearly 13.7% in FY17 on the back of higher revenue growth and tight control over other expenses. The company has also maintained its finance charges by keeping a tight control over working capital. Net profit witnessed a growth of 170% from FY14 to FY17 at Rs. 69.4Cr during the same period. At Rs. 250 per share (upper end of the price band), CIL is offered at 24.5x P/E on a fully post issue diluted capital based on FY17 EPS of Rs.10.2. With Real estate regulatory act being passed in majority of the states, we expect professional EPC players like Capacite to gain traction as majority of the real estate developers would focus more on the business development and marketing front. There is a big emphasis on timely delivery of construction services and more emphasis on demand for quality and durability of construction. We recommend subscribing to the issue.


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About Nirmal Bang

Founded in 1986 by Nirmal Bang, the Nirmal Bang is recognized as one of the largest retail broking houses in India, providing an array of financial products and services. Their retail and institutional clients have access to products such as equities, derivatives, commodities, currency derivatives, mutual funds, IPOs, insurance, depository services and PMS. The Group is headed by Mr. Dilip Bang and Mr. Kishore Bang.


For more information please write in to [email protected]


Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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