Investors loving this IPO

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One more IPO has hit the market and that is Vishnu Prakash R Punglia Ltd (VPRPL). The company is in the infrastructure business through the Engineering, Procurement and Construction (EPC) model.

It is looking to raise Rs 308 crore from the IPO and all of it will be a fresh issue. The IPO will remain open from 24th August to 28th August. On the first day, by 2.30.PM it got subscribed 2.34 times.  Even in the grey market, it is trading at a premium of Rs 54 per share and that implies listing at a premium of more than 54%.

Major businesses of VPRPL are water supply (WSP) where it is a strong player, road projects, irrigation network and railway projects. Its customers include the Central Government, state governments as well as private bodies. Its business is in nine states and one union territory.

The company does business through the EPC model. In the engineering stage, the company designs the whole construction process. In the procurement stage they procure all the equipment and materials required for construction after construction occurs.

The huge capex spent by the government on infrastructure projects is a tailwind for the company. It has an integrated business model which reduces its dependency on third parties.

However, there are a few risks for the company. The rop 10 clients account for more than 90% share and 62% of its order book is from Rajasthan. Hence, its business is not very diversified and given that it gets projects from governments it is also exposed to political risks.

As per brokers, its valuation multiples like P/E, EV/EBITDA are at a bit higher end.

Still, overall brokers are bullish on the company as they have given Apply rating. Anand Rathi, Arihant Capital, Nirmal Bang, Reliance Securities and Geojit Financial Services have given subscribe ratings on the company.