A B Infra RI review - (May apply)

•    The company is engaged in infra related construction activities.
•    It largely deals with government bodies for its contracts.
•    After steady progress for FY23 and FY24 in its financial performance, it marked a minor setback for 9M of FY25 that raise alert, despite its strong order book.
•    The RI is at a discount of around 58% based on its last traded price, which appears to have been manipulated.
•    Well-informed investors may park moderate funds for the long term.

PREFACE:
The RI is opening on April 07, 2025, but its offer document dated March 10, 2025, is made available on NSE about five days back and on BSE just this noon (April 04, 2025). IT has also erred on its order book, dividend policy and employees’ strength data.

ABOUT COMPANY:
A B Infrabuild Ltd. (ABIL) is engaged in activities like building steel grinder bridges, building of Railway Infrastructure and Road Contracts (BOT & Turnkey basis). The Company has 100% revenue from Government Contracts in case of Infra. It provides various services such as civil and structural work, new station infrastructure, redevelopment of old stations, new railway lines, gauge conversion, track linking, track formation, etc.

ABIL is an ISO 14001: 2004, ISO 9001:2008 & OHSAS 18001:2007 accredited along with certification from BM TRADA for compliance of ISO & OHSAS Certification. It is a Grade “AA” Contractor registered with the Municipal Corporation of Greater Mumbai) (MCGM) and Class 1(A) Contractor with PWD Maharashtra. The company operates in one segment, i.e., Creation of Infrastructure. The offer document is silent on its employees’ strength data. As of November 30, 2024, it had an order book worth Rs. 1133.42 cr. including escalation costs (see page no. xx of the offer document. Surprisingly it has mentioned order book worth Rs. 1158.68 cr. as of the same data (as per data shown on page no. xx of the offer document). Clarification is needed from the company in this regard.

ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 10646489 equity shares of Rs. 10 each at a fixed price of Rs. 37.50 per share to mobilize Rs. 39.92 cr. The issue opens for subscription on April 07, 2025, and will close on Aoril 25, 2025. The company is offering RI in the ratio of 1 for 5 to its eligible stakeholders as of the record date of March 10, 2025. Post allotment, shares will be listed on BSE and NSE. The company is asking for full money on application for the number of shares applied. ABIL is paying Rs. 0.35 cr. for this RI process, and from the net proceeds, it will utilize Rs. 30.61 cr. for working capital, Rs. 8.96 cr. for general corporate purposes. 

The RI is self-managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar to the issue.

Post RI, company’s current paid-up equity capital of Rs. 53.23 cr. will stand enhanced to Rs. 63.88 cr. Based on the RI price, the company is looking for a market cap of Rs. 239.55 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, the company has posted a total revenue/net profit of Rs. 123.79 cr. / Rs. 7.54 cr. (FY23), and Rs. 184.49 cr. / Rs. 11.42 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 9.39 cr. on a total revenue of Rs. 137.65 cr. This indicates a minor setback in its top and bottom lines compare to a net profit of Rs. 9.77 cr. on a total revenue of Rs. 9.77 cr. for the corresponding previous period. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. The offer document is silent on its dividend policy.

SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 544281 (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 91.02 on March 07, 2025, and opened on an ex-right basis at Rs. 84.07 on March 10, 2025. Since then, it has marked a high/low of Rs. 109.00 / Rs. 79.75. The scrip last closed at Rs. 89.46 as of April 04, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 109.00 / Rs. 61.77. The counter is well operated by vested interest counters.

The promoters’ holding has surged to 37.13% for the quarter ended December 31, 2024 against 32.73% for quarter ended December 31, 2025, and 32.73% as of October 15, 2024. Thus, two difference promoter’s holding for December 31, 2024 end period surprises one and all and perhaps we are witnessing this type of garble for the first time.  (Refer BSE Website for this data). The counter is well managed above the par value to lure investors.