RPP Infra Proj RI review - (Apply)

•    RPP Infra is engaged in EPC services for civil, infra and irrigation projects. 
•    It suffered a setback for the last 15 months working following the pandemic.
•    Orders on hand worth Rs. 3000+ cr. augurs well.
•    Investors may consider subscription with a long term perspective. 

ABOUT COMPANY:
RPP Infra Projects Ltd. (RPP) is providing engineering, procurement and construction services. It operates across different states with a focus on South India and, in particular, Tamil Nadu. RPP also executes projects overseas, for the Government of India, in neighbouring Asian countries.

To date, it has completed over 150 projects across diverse verticals, including roads, highways and bridges, infrastructure projects, mass housing projects and townships, industrial structures, irrigation and water supply projects, hotels, hospitals, educational institutions, and civil structures. Its business operations are predominantly in South India with a significant focus on Tamil Nadu. As of August 31, 2021, RPP employed 714 permanent, 147 contract labourers and 20 inter-state migrant workers.

The 3 business segments RPP operates in are the following:

1. Civil construction;
2. Infrastructure such as roads, highways, bridges, power, etc.; and
3. Irrigation and water management.

The company is currently executing 41 projects across 6 Indian states with an Order Book of Rs. 3,113.25 crores. It has three subsidiaries, 1 in India and 1 each in Sri Lanka and Mauritius. 

ISSUE DETAILS:
The company is coming out with a rights issue of 16000000 equity shares of Rs. 10 (FV) each at a fixed price of Rs. 30 per share in the ratio of 3 right shares against 5 shares held as of September 20, 2021. The company mulls mobilizing Rs. 48 cr. with this issue and will spend around Rs. 1.45 cr. for the entire process of this RI. This company is issuing 14230000 shares to eligible shareholders and 1770000 shares to its warrant holders. The RI opens for subscription on September 27, 2021, and will close on October 18, 2021. Post allotment, shares will be listed on BSE and NSE. On application Rs. 18 is to be paid (Rs. 6 towards FV and Rs. 12 as premium) and the balance of Rs. 12 (Rs. 4 towards FV and Rs. 8 premium) to be paid on one or more calls from time to time. 

From the net proceeds of the RI, RPP will utilize Rs. 40 cr. for long term working capital and Rs. 6.55 cr. for general corporate purpose. 

The company issued 4000000 warrants in July 2020 and has 2950000 warrants outstanding after the conversion of 1050000 warrants.  

The issue is solely lead managed by Inga Ventures Pvt. Ltd. and Cameo Corporate Services Ltd. is the registrar to the issue. 

RPP's current paid-up equity capital of Rs. 23.65 cr. will stand enhanced to Rs. 42.60 cr. post RI and conversion of warrants. Based on RI pricing, the company is looking for a market cap of Rs. 170.40 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, on a consolidated basis, for the last two fiscals, RPP reported turnover/net profits of Rs. 607.96 cr. / Rs. 18.16 cr. (FY20) and Rs. 524.33 cr.  / Rs. 15.50cr. (FY21). It suffered a minor setback for FY21 following the pandemic. For Q1 of FY22 ended on Jun 30, 2021, it has posted a net profit of Rs. 3.38 cr. on a turnover of Rs. 120.03 cr. Promoters have 55.30% holding in the company. 

SCRIP PERFORMANCE ON BSE:
The scrip last quoted on cum-rights basis at Rs. 87.10 as of September 16, 2021 closing and turned ex-rights at Rs. 71.70 on September 17, 2021. Since then it has marked high/low of Rs. 78.75 / Rs. 70.50.  The scrip has posted the last 52 weeks high/low of Rs. 78.75/Rs. 30.31. Based on its last quote of Rs. 72.95 as of September 22, 2021, the market cap is Rs. 310.77 cr.