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Review By Dilip Davda on February 23, 2017
Akash Infra-Projects Ltd (AIPL) is engaged into the business of civil construction and has undertaken various government contracts for construction of roads. It is primarily into the Construction of roads, resurfacing, widening repairs of roads and Minor bridges etc. It has proven track record of successful completion of various road projects in the state of Gujarat. It is also into the business of hospitality segment and operating and managing hotel named Pathikashram at Gandhinagar which is owned by Gujarat Government.
The company has been awarded projects through competitive bidding process and after meeting with a variety of prescribed pre-qualification criteria by various Municipal and local authorities/bodies including Road & Building Department-Gandhinagar Gujarat, Road & Building Department-Himmatnagar, Ahmedabad Municipal Corporation, Other Corporation & Private Sectors Projects in central and northern region of Gujarat, based on certain eligibility requirements like project experience; engineering capabilities and financial strength etc. AIPL has made registration as “Class AA” Contractors and special Category 1 in Road Works with Government of Gujarat and “Class AA” Contractors with Ahmedabad Municipal Corporation in order to execute contracts of higher value.
To generate long term working capital, general corpus funds, the company is coming out with a maiden IPO of 2040000 equity share of Rs. 10 each at a fixed price of Rs. 125 per share to mobilize Rs. 25.50 crore. Issue consists of offer for sale of 772800 shares and fresh issue of 1267200 shares. Issue opens for subscription on 28.02.17 and will close on 06.03.17. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge platform. Issue is solely lead managed by Tipsons Consultancy Services Pvt Ltd and Purva Sharegistry (India) Pvt Ltd is the registrar to the issue. After issuing initial equity at par from inception till 2009, it issued fresh equity at a price of Rs. 200 per share in March 2009 and at a price of Rs. 500 per share in March 2010. It has also issued bonus shares in the ratio of 1 for 1 in January 2010 and 1 for 3 in July 2016. Its current paid up equity capital of Rs. 6.32 crore will stand enhanced to Rs. 7.59 crore post issue.
On performance front, the company has (on a consolidated basis) posted turnover/net profits of Rs. 153.22 cr. / Rs. 9.77 cr. (FY14), Rs. 103.43 cr. / Rs. 5.43 cr. (FY15) and Rs. 88.92 cr. / Rs. 3.98 cr. (FY16). For first five months of the current fiscal it has earned net profit of Rs. 1.15 crore on a turnover of Rs. 26.56 crore. If we annualize this and attribute to fully diluted equity post IPO, then asking price is at a P/E of around 34 plus making it a pricy issue. As per prospectus details, its peers are trading at a P/E of around 24 and 3341.
On merchant banker’s front, this is the first mandate from its stable and has no track record.
Conclusion: Considering declining trends of top and bottom line and the higher pricing, only risk savvy cash surplus investors may consider it for long term.
Review By Dilip Davda on February 23, 2017
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The initial public offer (IPO) of Akash Infra Projects Ltd offers an early investment opportunity in Akash Infra Projects Ltd. A stock market investor can buy Akash Infra Projects IPO shares by applying in IPO before Akash Infra Projects Ltd shares get listed at the stock exchanges. An investor could invest in Akash Infra Projects IPO for short term listing gain or a long term.
Read the Akash Infra Projects IPO recommendations by the leading analyst and leading stock brokers.
Akash Infra Projects IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Akash Infra Projects IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.
Our recommendation for Akash Infra Projects IPO is to subscribe for long term.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Akash Infra Projects IPO.
The Akash Infra Projects IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Akash Infra Projects IPO allotment status to check.
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