Vishnu Prakash
IPO Size: Rs. 309 cr
- Entirely Fresh Issue, for working cap (Rs. 150 cr) and capex (Rs. 62 cr).
Price band: Rs. 94-99 per share
- Rs. 65 cr pre-IPO placement at Rs. 72 per share in Dec 2022
M cap: Rs. 1,234 cr, implying 25% dilution
IPO Date: Thu 24th Aug to Mon 28th Aug 2023, Listing: Mon 4th Sep 2023
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
EPC Company for Water Supply Projects
Jodhpur based Vishnu Prakash is an engineering, procurement and construction (EPC) company, focused on water supply, railways, roads and irrigation network projects. Water supply accounts for 78% of company’s current order book of Rs. 3,800 cr (as of 15.7.23), comprising 38 water supply turnkey projects.
Strong Outlook
Company enjoys a book-to-bill ratio of 3.3x, providing very healthy revenue visibility. Geographically too, its order book is diversified across West, Noth and North East India. Vishnu Prakash stands to gain immensely from Government’s ongoing Jal Jeevan Mission, which is a Rs. 3.6 lakh cr project to provide drinking water through individual household tap connections in entire rural India by 2024. Besides, Rs. 15,883 cr allocation for waste-water management under Swachh Bharat Mission (Urban) 2.0 and Rs. 34,081 cr worth projects under Atal Mission for Rejuvenation and Urban Transformation (AMRUT) for sewerage and septage management keep sector tailwinds positive over the medium term.
46% Revenue CAGR
Between FY20-23, revenue grew at 46% CAGR to Rs. 1,168 cr in FY23, with PBT growth of 88% CAGR during the same period. With 49% revenue CAGR in FY23, EBITDA jumped by 80% YoY to Rs. 160 cr, translating into 13.6% EBITDA margin. PAT doubled YoY to Rs. 91 cr, resulting in net margin of 7.8% and an EPS of Rs. 10.4.
On net worth of Rs. 314 cr, current debt equity ratio of 0.6:1 is comfortable, which will reduce to 0.3:1 post IPO, as all funds raised will flow into the company. Expanded net worth will support growth, through sizeable capex (Rs. 62 cr budgeted, against current net fixed assets fo Rs. 125 cr) and working capital (~5 months inventory + debtors). Current promoter holding of 90% will dilute to 68% post IPO.
Single Digit PE Multiple
At Rs. 1,414 cr enterprise value (EV), shares are being offered at FY23 EBITDA multiple of 9x and a PE multiple of 10x, which is seen attractive for 38% RoE clocked in FY23. On current year (FY24E) basis, EV/EBITDA multiple reduces to 7x and PE to 9x, which are lower than peers, ruling in double digit PE multiples.
