Ceigall India Ltd. (CIL), an infrastructure construction powerhouse, is gearing up to launch its initial public offering (IPO) on August 1, 2024. Known for its expertise in building elevated roads, flyovers, bridges, railway overpasses, tunnels, highways, expressways, and runways, CIL has established itself as one of the fastest-growing engineering, procurement, and construction (EPC) firms in India. Over the past three years, the company has demonstrated an impressive compound annual growth rate (CAGR) in revenue, bolstering its reputation in the industry.
CIL's financial performance has been nothing short of remarkable. In Fiscal 2024, the company achieved a year-on-year revenue growth of approximately 43.10%, outpacing its peers. From Fiscal 2021 to 2024, CIL grew at a CAGR of 50.13%, a testament to its robust expansion and execution capabilities. Starting as a modest construction firm, CIL has evolved into a significant EPC player, successfully completing numerous high-profile projects across ten Indian states.
The company's business operations are divided into EPC projects and hybrid annuity model (HAM) projects. CIL has completed over 34 projects, including 16 EPC, one HAM, five operation and maintenance (O&M), and 12 item rate projects. Currently, CIL is handling 18 ongoing projects, ranging from elevated corridors and bridges to tunnels and metro projects. Its portfolio showcases a blend of technical prowess and strategic project management.
As of June 30, 2024, CIL's order book stands at INR 9,470.84 crore, reflecting its growing influence in the infrastructure sector. The company has been empaneled with the Delhi Metro Rail Corporation Limited and a public sector undertaking for highway, bridge, and tunnel projects in northeastern India. This empanelment enhances CIL's ability to bid for substantial projects, further solidifying its market position.
CIL is set to raise INR 1,252.66 crore through its IPO, offering fresh equity shares worth INR 684.25 crore and an offer for sale of INR 568.41 crore. The price band is set between INR 380 and INR 401 per share, with the issue open for subscription from August 1 to August 5, 2024. The IPO constitutes 17.93% of the post-issue paid-up equity capital. Proceeds from the fresh equity will be used for equipment purchases, debt repayment, and general corporate purposes.
In the last three fiscals, CIL has shown significant growth in both total income and net profit. For FY22, FY23, and FY24, the company reported total incomes of INR 1,146.50 crore, INR 2,087.04 crore, and INR 3,066.19 crore, respectively, with corresponding net profits of INR 125.86 crore, INR 167.27 crore, and INR 304.31 crore. The company's robust financials are complemented by a consistent track record of project execution, often ahead of schedule.
Compared to its listed peers, such as PNC Infra and G R Infra, CIL’s IPO appears aggressively priced. However, given its strong order book and strategic market positioning, CIL presents a compelling long-term investment opportunity. Investors with a long-term horizon may consider allocating moderate funds to this IPO, betting on the company’s continued growth and market expansion.
Ceigall India Ltd.’s IPO is a significant milestone in its journey from a small construction company to a major EPC player. With a strong order book, proven execution capabilities, and strategic empanelments, CIL is poised for continued growth. While the IPO pricing may seem steep, the company’s long-term prospects make it an attractive investment for those willing to navigate the competitive and fragmented infrastructure sector.
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