Manav Infra Projects IPO Review (Apply at your own risk)

Review By Share India on Aug 31, 2017

IPO Details

IPO Details

Issue Open:

04-Sep-17

Face value:

10.0

Issue Close:

08-Sep-17

Issue size:

1,836,000

Price:

30.0

Fresh Issue:

1,836,000

Bid Lot :

4,000

Lead Manager:

Navigant

Listing:

NSE EMERGE

Registrar:

Karvy

INVESTMENT RATIONALE

Strategic movement into piling related to improve margins: Manav Infra (MIL) reported EBITDA/PAT margin of 13.1%/5.6% over FY17. Post starting operations in 2009 with excavation, MIL has strategically moved into higher premium job-work like piling which is expected to continue to uplift margins to mid-teens over FY18-FY20E. This expansion of margins will provide a natural entry barrier in segment, improve return ratios and deepen client relationship for MIL.

Purchase of equipments in auction rather than using equipments on lease: MIL has changed its strategy, to purchase second-hand equipment from developed countries – where equipments are sold as per regulatory concerns even though they have significant life span remaining from operations perspective. This strategy leads to saving on lease expense for non-operating hours and effective capital management. Demand forecast from infrastructure development and urbanization assures efficient utilization for new equipments.

Technical knowhow, domain expertise and client relationship to ensure order flow: MIL enjoys strong relationship with clients like Kanakia, JKIL, ACC, Man Infra, Nirmal Lifestyle etc. and as such possesses technical knowhow to deliver specific projects in a time bound manner making it a preferred partner for execution. This deep understanding of business and client relationship will continue to drive top line for MIL.

VALUATION

MIL is bringing an issue of INR 55.1mn at pre issue and post issue P/E(x) of 14.5 and 19.9 respectively vs. an industry P/E(x) of 32.4. MIL is a low debt company with Total D/E of 0.32 and high ROCE of 19.9%. Book value of per share is INR 16.6.

Concern: For detailed risk factors, refer to final prospectus

Objects of the Issue:

1) to part finance incremental working capital requirements of the Company

2) to meet general corporate purposes

3) to meet the expenses of the Issue

COMPANY BACKGROUND

Company is engaged into the business of civil construction services such as piling, excavation, road construction, land leveling. They also provide a complete range of earth moving machines and construction equipments on rent for all type of infrastructure and construction related work. Its customers include medium to large size of construction and infrastructure companies like Kanakia Spaces Realty Private Limited, J Kumar Infra Projects Limited, ACC Limited, J P Infra Constructions, Simplex Infrastructure Limited, Man Infra Constructions Limited, Nirmal Lifestyle Limited amongst others.

PEER COMPARISON

Peer Comparison

Company Name:

Face Value

NAV/share

RONW(%)

EPS

PE Ratio

Net Profit(MN)

Total Income(MN)

J Kumar Infra

5

183.6

10.0

13.9

20.6

1,055.0

14,375.0

RPP Infra

10

76.8

14.9

10.6

23.1

240.0

3,663.0

Manav Infra Projects Ltd.

10

24.3

21.2

5.2

5.8

240.0

183.0

FINANCIAL STATEMENT

Financial Statement

Financial Statement

(INR MN)

Particulars :

FY 2014

FY 2015

FY 2016

FY 2017

Revenue

119.71

148.38

164.41

180.77

Expenditure

90.23

143.77

145.33

158.98

Operating Profit

29.48

4.61

19.08

21.79

OPM(%)

24.62

3.10

11.61

12.05

Other Income

0.01

13.87

0.02

2.20

Depriciation

10.61

8.19

5.97

5.69

EBIT

18.87

10.29

13.14

18.29

Interest

14.82

6.53

8.89

10.32

PBT

4.05

3.75

4.25

7.97

Tax

1.95

3.66

(1.80)

(2.36)

PAT

2.10

0.09

6.05

10.33

NPM(%)

1.76

0.06

3.68

5.71

Eq Cap

42.44

42.46

48.16

58.46

Net worth

42.36

42.42

43.47

48.61

Eq Share (No.'s)

2000000.00

2000000.00

2000000.00

2000000.00

Weighted Avg.

2000000.00

2000000.00

2000000.00

2000000.00

EPS

1.05

0.05

3.02

5.16

RONW(%)

0.05

0.00

0.14

0.21

Review By Share India on Aug 31, 2017

Review Author

Share India Securities Ltd.

Share India is a leading broking house of India with more than 25 years of experience. Share India have a retail client base of over 8,000 active clients spread across Punjab, Haryana, Delhi, Uttar Pradesh, Rajasthan, Maharashtra and Andhra Pradesh. Company constitute ~2-3% of total volume at NSE on daily basis. Share India regularly suggest its clients for investment opportunities in SME segment.

More Manav infra projects IPO Views / Analysis / Recommendations ...

2 Comments

Subodh Purohit
2. Subodh Purohit  Sep 4, 2017 10:20
There is no indication of buy or avoid. What is the analysis?
Subodh Purohit
1. Subodh Purohit  Sep 4, 2017 10:19
There is no indication of buy or avoid. What is the analysis?








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