B. R. Goyal BSE SME IPO review (Apply)

•    The company is EPC contractor for infra projects like highways, bridges, building and other construction related works. 
•    Currently it has ongoing contracts in seven states, and is expanding in to other states with recent biddings.
•    The company posted steady growth in its top and bottom lines from FY22 to FY24.
•    Based on its recent financial performance the issue appears fully priced. 
•    Investors may park funds from medium to long term. 

ABOUT COMPANY:
B R Goyal Infrastructure Ltd. (BRGIL) is engaged in the construction and development of infrastructure projects such as roads, highways, bridges and buildings since inception and has ongoing projects in the state of Madhya Pradesh, Maharashtra, Gujarat, Haryana, Uttar Pradesh, Mizoram and Manipur. The company carries out EPC services for third parties (majorly for government departments), primarily in the roads & highways, commercial complex, industrial parks, housing projects and HAM (Hybrid Annuity Mode) Projects. The company is also engaged in wind power generation, manufacturing of Ready-Mix Concrete (RMC) and Toll Collection Contract (TCC).

Its business may be broadly divided into the categories such as: (i) Civil construction services, including Engineering Procurement Construction (EPC) services; (ii) Ready Mix Concrete (RMC) manufacturing; (iii) Wind power generation, (iv) Toll Collection Contract (TCC), and (v) Residential Plotting Projects. It executes road construction projects as EPC contractors and construction services providers. Also, currently it is undertaking one HAM Project. For the projects that it delivers on an EPC and construction services basis, the scope of services typically includes design and engineering of the project, procurement of raw materials, project execution at site with overall project management up to the commissioning of these projects.

In addition, the company also undertakes repair and maintenance of projects in accordance with contractual arrangements. The Company has also forayed in the business of wind energy/Power Generation by installing a 1.25 MW Wind Power Turbine at Jaisalmer (Rajasthan) which was commissioned in 2005. The Company has entered into Power Purchase Agreement with Ajmer Vidyut Vitran Nigam Limited for a period of 20 years commencing from March 2005 at a pre-determined tariff. While it independently executes projects where it is pre-qualified to bid on an independent basis, the company also enter into joint ventures and consortiums, from time to time with other infrastructure and construction companies, where a project requires it to meet specific eligibility requirements to be met through the joint venture or consortium as the case may be.

As of September 30, 2024, the Company has 26 ongoing projects in the roads, bridges, building and TCC sector which includes construction, improving, widening, strengthening, upgradation and rehabilitation of two, four and six lane highways construction of high-level bridge and construction of road network and an unexecuted order Book of Rs. 873.40 cr. that comprises 24 EPC (road & building) projects and 2 toll projects.

As of September 30, 2024, it had 402 employees on its payroll and additional 212 contract workers for TCC contracts.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6312000 equity shares of Rs. 10 each to mobilize Rs. 85.21 cr. at the upper cap. It has announced a price band of Rs. 128 – Rs. 135 per share. The issue opens for subscription on January 07, 2025, and will close on January 09, 2025. The minimum number of shares to be applied is for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.49% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, the company will utilize Rs. 42.00 cr. for working capital, Rs. 8.02 cr. for capex, and the rest for general corporate purposes. 

The company has reserved 38000 shares for its eligible employees and from the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors. 

The IPO is solely lead managed by Beeline Capital Advisors Pvt. Ltd., and Link Intime India Pvt. Ltd., is the registrar to the issue. Beeline Group’s Spread X Securities Pvt. Ltd., is the Market Maker for the company. 

Having issued/converted initial equity shares at a price of Rs. 40 per share, the company issued further equity shares in the price range of Rs. 100 – Rs.  250 per share between March 2009 and August 2024. It has also issued bonus shares in the ratio of 6 for 1 in May 2018, and 1 for 1 in June 2024. The average cost of acquisition of shares by the promoters is Rs. 0.36, Rs. 3.76, Rs. 3.80, Rs. 4.45, and Rs. 19.83 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.51 cr. will stand enhanced to Rs. 23.83 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 321.63 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 228.63 cr. / Rs. 7.56 cr. (FY22), Rs. 353.30 cr. / Rs. 17.34 cr. (FY23), and Rs. 596.19 cr. / Rs. 21.89 cr. (FY24). For 4M of FY25 ended on July 31, 2024, it earned a net profit of Rs. 1.95 cr. on a total income of Rs. 156.87 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 10.33 and an average RoNW of 16.97%. The issue is priced at a P/BV of 1.83 based on its NAV of Rs. 73.96 as of July 31, 2024, and at a P/BV of 1.49 based on its post-IPO NAV of Rs. 90.39 per share (at the upper cap).

If we attribute FY25 annualized earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 55.10. Based on FY24 earnings, the P/E stands at 14.69. The issue relatively appears fully priced. According to the management, as per historical data, they get around 35% of top line in first half and 65% in the second half with commensurate movement in the bottom line. The management is confident of maintaining the trends set from FY22 to FY24 in coming years with the orders on hand and the bidding done for major new contracts. 

For the reported periods, the company has posted PAT margins of 3.36% (FY22), 5.01% (FY23), 3.72%, (FY24), 1.25% (4M-FY25), and RoCE margins of 12.28%, 19.60%, 19.72%, 2.55%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listing, based on its financial performance and future prospects. 

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Teerth Gopicon, and Udayshivakumar Infra, as their listed peers. They are trading at a P/E of 41.5, and 16.0 (as of January 03, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
This is the 55th mandate from Beeline Capital in the last three fiscals, out of the last 10 listings all listed with premiums ranging from 10.69% to 146.91% on the date of listing.