GR Infraprojects, Clean Science & Technology doubled investors wealth; what’s next?

GR Infraprojects and Clean Science & Technology both have strong balance sheets and industry-leading margin and return ratios

GR Infraprojects and Clean Science & Technology have almost doubled investor wealth on listing day.

Blockbuster listing like the ones of GR Infraprojects and Clean Science & Technology is the actual reason behind the mad IPO rush. Both GR Infraprojects and Clean Science & Technology have almost doubled investors wealth on the listing day itself that too on a day when markets were witnessing a sell-off on concerns of rising delta variant cases of Covid 19.

Udaipur-based infrastructure developer GR Infraprojects got listed at Rs 1,715.85 on the National Stock Exchange, compared to the issue price of Rs 837, marking a premium of 105%. On the BSE the stock was listed at Rs 1,700, a premium of 103.11%. Shares of the company closed at Rs 1,721.90 apiece on July 20 delivering 106% returns in just two days.

In fact, its issue was subscribed a whopping 102.58 times making it the most oversubscribed public offer in the roads and highway sector in over a decade.

Likewise, the little known newly listed Pune-based Clean Science & Technology has become the talk of the town as it almost doubled investor wealth on the listing day. The company made its debut on July 19 with an opening price of Rs 1,755 on the NSE, compared to the issue price of Rs 900, implying a premium of 95%. On the BSE, Clean Science and Technology got listed at Rs 1,784, at a premium of 98.27%. As of yesterday’s closing, the stock gave 93% returns to its shareholders at it settled at Rs 1,738.45 per share.

What’s next?

While most brokerages had a subscribe rating on the IPO and they are turning out to be doublers, the question now is what’s next?

According to Angel Broking at current levels, shares of GR Infraprojects are fairly priced hence short-term investors to book profits in the stock. Long term investors may book partial profits and hold the balance in their portfolios as it provides exposure to an EPC company with strong fundamentals.

Even Marwardi Shares & Finance is of the opinion that investors should continue holding this stock from a medium-term perspective as the company is a focused EPC player with expertise in road projects and has an established track record of timely execution. The company has a strong order book of Rs 19,025.8 crore as of Mar 31, 2021, comprising 16 road EPC projects, 10 HAM (hybrid annuity board) projects and three other projects and valuations are still in favour of investors.

While those who didn’t get any allotment can adopt a wait and watch strategy on the counter.
On the other hand, Motilal Oswal Financial Services expects Clean Science & Technology to do well post listing. Green chemicals demand is expected to grow at 10.5% CAGR (F&S report) globally over CY19-25E and it has built a well-diversified product portfolio in this space to capitalize on this opportunity. The brokerage firm is bullish on Clean Science given its global leadership in green chemicals, diversified product portfolio, robust financials with industry-leading margins/return ratios and strong focus on ESG front.

On the other hand, B&K Securities has initiated coverage on the counter with a price target of Rs 1,600 per share. As it believes the unique catalytic process has helped the company to improve productivity, yields and cost efficiency resulting in superior financial performance. The brokerage firm is of the opinion that the company can deliver Sales a growth of 27.3% CAGR (Compounded Annual Growth Rate), EBITDA (Earnings Before Interest Tax Depreciation & Amortization) to grow at a CAGR of 25.4% while PAT (Profit After Tax) is likely to grow at CAGR 25% over FY21-25E. The company has a strong balance sheet with net cash of Rs 2,500 crore and a healthy return on capital employed of 58.6%.

(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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