Ceigall India IPO: The initial public offering (IPO) of infrastructure company Ceigall India Limited (CIL), which opened for public subscription on Thursday, has received a subdued response so far. On the first day of bidding, the IPO received just 0.63 times subscription. Now, till 4:01 pm on the second day of bidding on Friday, the 1,252.66-crore IPO received a 1.16 per cent subscription, garnering bids for 2,54,63,289 shares as against 2,18,87,120 shares on offer.
According to the latest data, the retail quota received a 1.61 times subscription, while the non-institutional investors category also got a 1.61 times subscription. The QIB category received a 1 per cent subscription.
The Ceigall India IPO will be closed on August 5. Its price band was fixed at Rs 380-Rs 401 apiece. The share allotment will likely be finalised on August 6, while its listing will take place on both BSE and NSE on August 8.
Ceigall India IPO GMP Today
According to market observers, unlisted shares of Ceigall India Ltd are trading Rs 70 higher in the grey market than its issue price. The Rs 70 grey market premium or GMP means the grey market is expecting a 17.46 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
The Rs 70 GMP is significantly lower than the Rs 90 grey market premium recorded on Thursday.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
Ceigall India IPO: Analysts’ Recommendations
Most analysts have granted a ‘Subscribe’ rating to the Ceigall India IPO.
Brokerage firm Reliance Securities in its IPO note said CIL is one of the fastest growing EPC (engineering, procurement, and construction) companies with 20 years experience, expertise in executing specialised structures projects of different sizes and involving varying degrees of complexity which has been the landmark projects for the company. CIL strategically bid for projects, leveraging its experience in roads and highways sectors to grow portfolio in other sectors like HAM, BOT for higher business growth areas and expanding its geographical footprint to various states of India. CIL follows an asset light model, ensuring better fixed asset turnover ratios and strong relationships with lenders enables to raise timely financing at competitive terms whenever required.
“We believe CIL will continue to maximize revenues with multiple projects in hand and increase the profit margins and return ratio over the next few years. Hence, we recommend a SUBSCRIBE to the issue,” Reliance Securities stated.
Another brokerage SBI Securities in its IPO note also said Ceigall India is one of the fastest-growing EPC company, has a strong order book, project development execution capabilities, and an efficient business model.
“The company is valued at FY24 P/E multiple of 23.0x based on the post-issue capital on upper price band. Ceigall is one of the fastest-growing EPC companies and has transitioned from a small construction company to an established EPC player over the last two decades. The company has one of the best return ratios among the listed peers which is on the back of its efficient business model. However, looking at the consistently negative operating cash flows generated by the company, high debt levels and geographical concentration in the states of Punjab, UP and J&K (87% of FY24 revenues), the business model seems to be carrying relatively higher risk as compared to its listed peers. Due to this, the issue can be a slightly risky bet and hence, we recommend investors to SUBSCRIBE to this issue for long term.”
Brokerage firm Swastika in its IPO note said, “The company’s consistent financial performance, marked by increasing top and bottom lines (revenues and profits), further solidifies its position in the sector. However, significant contingent liabilities, dependence on government contracts, high working capital requirements, and intense competition present key challenges.
“The IPO is priced at a fully valued P/E of 20.7x. While the company’s growth prospects are promising, the aforementioned risks warrant a cautious approach. Considering these factors, a long-term perspective is essential for investors considering this IPO,” Swastika added.
Ceigall India IPO: More Details
The Ludhiana-based company’s IPO is a combination of a fresh issue of Rs 684.25 crore and an Offer-For-Sale (OFS) of up to 1.42 crore equity shares worth Rs 568.41 crore, at the upper end of the price band, by the promoters, and individual selling shareholder. This takes the total issue size to Rs 1,252.66 crore.
Investors need to apply for a minimum of 37 equity shares and in multiples thereof. Hence, the minimum investment by retail investors would be Rs 14,837 [22 (lot size) x Rs 401 (upper price band)].
Promoters and promoter group entities — Ramneek Sehgal, Ramneek Sehgal and Sons HUF, Avneet Luthra, Mohinder Pal Singh Sehgal, Parmjit Sehgal, Simran Sehgal — and individual shareholder Kanwaldeep Singh Luthra are divesting their stakes in the public issue.
Infrastructure company Ceigall India Ltd on Wednesday said it has mobilised Rs 375 crore from anchor investors, a day before its initial share-sale opening for public subscription.
The proceeds from the fresh issue will be used for the purchase of equipment, payment of debt, and a portion will be used for general corporate purposes.
Founded in 2002, Ceigall India is an infrastructure construction company with experience in undertaking specialised structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways and runways.
As of June 2024, the company’s order book stood at Rs 9,470 crore. Its clientele includes public sector entities like Indian Railway Construction International Ltd, Military Engineer Services and Bihar State Road Development Corporation Ltd.
Half of the issue size has been reserved for qualified institutional buyers, 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors. Further, investors can bid for a minimum of 37 equity shares and in multiples thereof.
The company’s revenue from operations surged 46.5 per cent to Rs 3,029.35 crore in fiscal 2024 from Rs 2,068.17 crore in fiscal 2023 and profit after tax grew to Rs 304.3 crore from Rs 167.27 crore.
ICICI Securities Ltd, IIFL Securities Ltd and JM Financial Ltd are the book-running lead managers for the IPO. The equity shares are proposed to be listed on the BSE and NSE.
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