Ceigall India IPO fully subscribed on day 2; Check out 10 key things to know from RHP before investing

The subscription period for the Ceigall India IPO began on Thursday, August 1, and will end on Monday, August 5. The price band for the offering has been set at ₹380 to ₹401 for each equity share with a face value of ₹5. The initial public offering (IPO) lot size for Ceigall India is 65 equity shares, with subsequent lots of 37 equity shares. Ceigall India IPO subscription status was 1.23 times on the second bidding day.

The IPO consists of an offer-for-sale (OFS) of 1,41,74,840 equity shares by existing shareholders, including promoters, and a fresh issue of equity shares for ₹684.3 crore by the firm.

Promoters Ramneek Sehgal, Ramneek Sehgal and Sons HUF, Avneet Luthra, Mohinder Pal Singh Sehgal, Parmjit Sehgal, and Simran Sehgal are among the selling shareholders in the OFS.

The net proceeds will be used by the firm to fund its subsidiary, Ceigall Infra Projects Private Limited, as well as general corporate purposes, equipment acquisitions, and the full or partial repayment or prepayment of certain debts that the company has taken out.

ICICI Securities Ltd, IIFL Securities Ltd, and JM Financial Ltd are the book running lead managers for the Ceigall India IPO, while Link Intime India Private Ltd is the registrar.

Here are 10 key things from the Red Herring Prospectus (RHP) that investors might want to know before subscribing to the issue.

Ceigall India IPO Promoters

The company's promoters are Ramneek Sehgal, Ramneek Sehgal and Sons HUF, and RS Family Trust. The promoters of the firm own 134,144,000 equity shares in total as of the date of this Red Herring Prospectus, which makes up 85.37% of the equity share capital that the company has issued, subscribed for, and paid for.

Ceigall India IPO Peers

The listed peers of the company are PNC Infratech (P/E of 14.75), G R Infraprojects (P/E of 12.60), H.G. Infra Engineering (P/E of 20.43), KNR Constructions (P/E of 13.17), ITD Cementation India (P/E of 29.39), and J Kumar Infraprojects (P/E of 19.68).

Ceigall India Business

The main commercial operations of the Ludhiana-based company are mostly divided into hybrid annuity model (HAM) projects and engineering, procurement, and construction (EPC) projects, which are located in more than 10 Indian states. In the roads and highways industry, the company has completed over 34 projects, including 16 EPC, 1 HAM, 5 O&M, and 12 item rate projects. There are eighteen active projects at the moment, comprising five HAM projects and thirteen EPC projects. These projects include elevated corridors, expressways, runways, flyovers, tunnels, metro projects, and multi-lane roads.

Ceigall India Order Book

As of June 30, 2024, the order book of the firm was at ₹9,470.84 crore, ₹9,225.78 crore, ₹10,809.04 crore, and ₹6,346.13 crore, corresponding to the fiscal years 2024, 2023, and 2022. As of June 30, 2024, 80.31% of their order book was made up of projects that the NHAI has granted.

Indian Railway Construction International, Military Engineer Services, and Bihar State Road Development Corporation Ltd are some of our other public sector clients. As of the fiscal years ending on March 31, 2024, March 31, 2023, and March 31, 2022, the company's book to bill ratio was 3.05, 5.23, and 5.60 times, respectively.

Ceigall India customers

The following table provides a breakdown the company's top 10 customers that constituted more than 50% of their total revenue for the Financial Year ended March 31, 2024.

Ceigall India Financial

The company saw a significant increase in profit for the year, going from ₹167.27 crore in the Fiscal 2023 to ₹304.31 crore in the Fiscal 2024. The primary drivers of this increase in revenue were construction contracts, sales of goods and materials, and finance income on financial assets carried on amortised cost. Ceigall India's revenue from operations increased significantly, rising from ₹2,068.17 crore in the Fiscal 2023 to ₹3,029.35 crore in the Fiscal 2024.

Ceigall India IPO key risks

• The company's cash flows, business, operational performance, and financial position might all suffer from delays in the completion of current projects, which could also result in cost overruns, contract termination, or damage claims.
• Every project that the company has worked on has been chosen mostly via a process of competitive bidding. They might not always get their offers approved. The company might not be able to find and acquire new projects, compete for existing ones, or win them, which might have a negative impact on operations and business outcomes.

Lock-in of equity shares allotted to anchor investors

A 90-day lock-in term applies to 50% of the equity shares awarded to anchor investors under the anchor investor component, while a 30-day lock-in period applies to the remaining 50% of the equity shares.

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