IRCON International IPO opens today for subscription and several brokerage houses have come up with their research reports. Priced in the range of INR470 – 475 per share, the IPO will mobilize as much as INR470.49 crore at the upper price band. Retail investors and employees are eligible for a discount of INR10 per share. Here is a quick overview of IRCON International analyst recommendations:
ICICIdirect.com has a subscribe rating on the IPO. “IRCON’s revenues grew at 29.4% CAGR to | 4001.2 crore in FY16-18. The order book was at a robust | 22407 crore, which implies an order book to bill ratio of 5.6x on FY18 numbers, indicating revenue growth getting better ahead. At the IPO price band of INR470-475, the stock is available at 10.7-10.9x FY18 EPS. Adjusting for subsidiary investments worth INR700 crore, the issue is available at 9.2x FY18 EPS on higher band, which is attractive valuation vis-à-vis its peer companies. Hence, we have a SUBSCRIBE recommendation on the issue at the offer price only for listing gains,” said the brokerage house in its IPO note.
Choice Broking is also positive on the prospects of the company and has assigned subscribe recommendation. “On valuation front, at higher price band, the company is demanding a P/E valuation of 10.9x (to its restated FY18 EPS of Rs. 43.8). Moreover, based on FY19 and FY20 earnings, the forward P/E comes out to 9.9x and 8.4x, respectively. Thus issue seems to be attractively priced considering its strategic importance in the Indian Railway, future growth outlook, limited competition, virtually debt free operations and healthy financial performance. Thus considering the above observation we assign a “SUBSCRIBE” rating to the issue,” noted Choice Broking’s analysis.
SMC Global Securities believes the company is expected to see good growth record going forward. “Considering the P/E valuation on the upper price band of Rs.475 EPS and P/E of FY2018 are Rs.43.76 and 10.85 multiple respectively and at a lower price band of Rs. 470, P/E multiple is 10.74. Looking at the P/B ratio on the upper price band of Rs.475., book value and P/B of FY18 are Rs.405.83 and 1.17 multiple respectively and at a lower price band of Rs.470 P/B multiple is 1.16. No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital,” said the firm, assigning the IPO three stars out of five.
IRCON International analyst recommendations: Order book major draw
Centrum Wealth believes the offer is attractive and its strong order book provides revenue visibility. IRCON is looking at expanding its portfolio with BOT/Design, Build, Finance, Operate, Transfer (DBFOT)/EPC/HAM contracts along with projects development and operation via JVs and SPVs. Given IRCON’s focus on expanding geographic presence and foray into allied infrastructure segments—like road and highways—could bode well owing to the current infra spends by the government. “Given the government’s focus on infrastructure spends (initiatives like Metro, Bharatmala, Economic corridors), healthy order book and attractive valuations, we suggest that investors can Subscribe to the issue,” said the firm in its research note.
Adding further to positive IRCON International analyst recommendations is SPA Securities which believes the company’s strong order book, highly experienced management team, proven track record of execution capabilities, project bidding criteria will be helpful. “At present, IRCON has enough cash to meet working capital needs and a passes-through amount reflects a healthy balance sheet. We recommend Subscribe to the issue with a long-term perspective,” said SPA Securities’ research note.
As seen above, IRCON International analyst recommendations are all in the positive territory and most of the points analysts made have been captured in our analysis of the IPO. Feel free to check this discussion page of the IPO to get a first hand account of the mood in the market.