What You Must Know About Ceigall India IPO: Price Band ₹380 to ₹401 Per Share

About Ceigall India Limited

Ceigall India Ltd. (CIL) is an infrastructure construction company with over 20 years of experience in the industry. The company specialises in undertaking complex structural work such as elevated roads, flyovers, bridges, railway over bridges, tunnels, highways, expressways, and runways. CIL has established itself as one of India's fastest-growing engineering, procurement, and construction (EPC) companies, achieving a remarkable three-year revenue CAGR as of Fiscal 2024 among companies with a turnover exceeding ₹1000 crore.

Since its incorporation in July 2002, Ceigall India has transitioned from a small construction company to a well-established EPC player. The company has demonstrated expertise in designing and constructing various road and highway projects, including specialised structures, across 10 states in India. Its growth trajectory is impressive, with a CAGR of 50.13% between Fiscal years 2021 and 2024.

Ceigall India's principal business operations are divided into two main categories: EPC projects and hybrid annuity model (HAM) projects. The company has steadily increased its execution capabilities over the years. From its initial road project for the Punjab Public Works Department in 2006, with an aggregate project cost of ₹6.29 crore for 20.42 lane km, CIL has progressed to handling much larger projects. As of the date of the Red Herring Prospectus, the company is eligible to bid for single NHAI EPC projects up to a value of ₹5700 crore and single NHAI HAM projects up to a value of ₹5500 crore.

Ceigall India has completed over 34 projects in the roads and highways sector, including 16 EPC, one HAM, five O&M, and 12 Item Rate Projects. It has 18 ongoing projects, comprising 13 EPC projects and five HAM projects. These projects include elevated corridors, bridges, flyovers, rail over-bridges, tunnels, expressways, runways, metro projects, and multi-lane highways.

The company's Order Book has shown consistent growth, amounting to ₹9470.84 crores, ₹9225.78 crores, ₹10809.04 crores, and ₹6346.13 crores as of June 30, 2024, and Fiscals 2024, 2023, and 2022, respectively. Ceigall India has built a reputation for delivering quality projects, often completing them on time or ahead of schedule. As of March 31, 2024, the company had 2256 employees on its payroll, with additional contract labourers hired as needed.

Highlights of the Ceigall India IPO

Here are some highlights of the Ceigall India IPO on the main board of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

• The issue opens for subscription on August 1, 2024, and closes on August 5, 2024, both days inclusive. The Ceigall India IPO is a book-built issue of ₹1,252.66 crores.
• The issue combines a fresh issue of 1.71 crore shares aggregating ₹684.25 crores with an offer for sale of 1.42 crore shares aggregating ₹568.41 crores. Ceigall India IPO has a face value of ₹5 per share.
• The price band for the issue is set at ₹380 to ₹401 per share. The total issue size comprises 31,238,480 shares, which, at the upper price band of ₹401 per share, aggregate to ₹1,252.66 crore.
• The company has offered an employee discount of ₹38 per share. The company's promoters are Ramneek Sehgal, Ramneek Sehgal and Sons HUF, and RS Family Trust. Their holdings in the company currently stand at 99.99%.
• The fresh issue funds will be used for the purchase of equipment and the repayment/prepayment of certain borrowings taken out by the Company and its Subsidiary, Ceigall Infra Projects Private Limited.
• ICICI Securities Limited, IIFL Securities Ltd, and JM Financial Limited are the book-running lead managers for the issue, while Link Intime India Private Ltd is the registrar.

Ceigall India IPO: Key Dates

The Ceigall India IPO opens on Thursday, August 1, 2024, and closes on Monday, August 5, 2024. The bid date is from August 1, 2024, at 10.00 AM to August 5, 2024, at 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day, which is August 5, 2024.

Shares credited to the demat account on August 7, 2024, will be visible to investors under the ISIN Code provided by the company. This allocation to the demat account is only applicable to the extent of the allocation of shares. If no allocations are made in the IPO, then no credit would be visible in the demat account.

IPO Allocation and Minimum Investment Lot Size

Ceigall India Limited has announced the breakdown of the overall IPO in terms of allocation to various categories, as captured in the table below.

The minimum lot size for the IPO investment will be 37 shares. The table below breaks down the lot sizes for different categories.

Financial highlights: Ceigall India Limited

The table below captures the key financials of Ceigall India Limited for the last 3 completed financial years and the nine months ended December 31, 2023.

Data Source: Company DRHP filed with SEBI

Ceigall India Limited has demonstrated strong financial performance over the past three years, with consistent revenue growth and improving profitability. The company's revenue from operations has grown significantly from ₹8,732.02 million in Fiscal 2021 to ₹20,681.68 million in Fiscal 2023, representing a CAGR of 53.86%. For the nine months ended December 31, 2023, the company has already surpassed its full-year revenue for Fiscal 2023.

The company's EBITDA has also grown robust, increasing from ₹1,597.33 million in Fiscal 2021 to ₹2,956.29 million in Fiscal 2023. The EBITDA margin, however, has seen a slight decline from 18.29% in Fiscal 2021 to 14.29% in Fiscal 2023 but has improved to 16.94% for the nine months ended December 31, 2023.

Profit after tax has grown from ₹1,125.00 million in Fiscal 2021 to ₹1,672.72 million in Fiscal 2023, with the nine-month figure for FY2024 already surpassing the full-year PAT of FY2023. The PAT margin has decreased from 12.88% in Fiscal 2021 to 8.09% in Fiscal 2023 but has shown improvement in the latest nine-month period at 9.41%.

The company's return on equity (ROE) has been consistently high, though it has decreased from 36.85% in Fiscal 2021 to 28.20% in Fiscal 2023. Similarly, the return on capital employed (RoCE) has decreased from 50.62% in Fiscal 2021 to 28.67% in Fiscal 2023, but both ratios remain healthy.

The total debt-to-equity ratio has increased from 0.10 in fiscal 2021 to 1.18 in fiscal 2023, indicating an increase in leverage, but it has improved to 0.89 for the nine months ending December 31, 2023.

At the upper price band of ₹401 per share, the P/E ratio based on FY2023 earnings stands at approximately 42.5x. While this valuation may seem high, it's important to consider the company's strong growth trajectory and improving profitability metrics. The infrastructure construction sector, particularly in road and highway projects, has seen significant government focus and investment, which bodes well for companies like Ceigall India Limited.

Investors should note that Ceigall India Limited operates in a capital-intensive industry with cyclical demand. The company's future performance will depend on its ability to secure and execute large-scale projects efficiently, manage working capital effectively, and navigate regulatory challenges in the infrastructure sector.