Globe Civil Proj. IPO review (May apply)

•    The company is engaged in EPC and MEP projects and related services.
•    Till FY24, its primary focus was on educational institute projects, but now has diverse activities.
•    If marked de-growth in top and bottom lines for FY23,
•    Based on its recent financial data, the issue appears fully priced.
•    As of March 31, 2025, its order book stood at Rs. 669+ cr.
•    Well-informed investors may park moderate funds for medium to long term.

ABOUT COMPANY:
Globe Civil Projects Ltd. (GCPL) is an integrated engineering, procurement and construction (“EPC”) company headquartered in New Delhi. It has undertaken projects in eleven (11) states of India, namely, Uttar Pradesh, Haryana, Delhi, Maharashtra, Andra Pradesh, Karnataka, Gujarat, Chhattisgarh, Rajasthan, Uttarakhand, and Himachal Pradesh.

The company is into execution and construction of infrastructure projects comprising of Transport and Logistics projects, Social and Commercial projects and non-Infrastructure projects comprising of commercial offices and housing. While its primary focus and strength had been deeply rooted in construction of education institution buildings and railway infrastructure, it has diversified in undertaking specialized infrastructure and non-infrastructure projects, such as railway bridges, airport terminal, elevated railway terminal and railway bridges and hospitals.

Additionally, GCPL also undertakes trading of goods, particularly TMT steel. Its revenue from operations from construction project receipts has increased from Rs. 253.61 cr. in Fiscal 2022 to Rs. 293.27 cr. in Fiscal 2024 at a CAGR of 7.53%. Its revenue from trading of TMT steel has increased from Rs. 32.09 cr. in Fiscal 2022 to Rs. 38.90 cr. in Fiscal 2024 at a CAGR of 10.09%. The company also provides mechanical, electrical and plumbing (“MEP”), architectural and structural work, HVAC, firefighting and fire alarm systems (forming part of the construction project receipts segment).

As of March 31, 2025, it had an order book worth Rs. 669+ cr., which was Rs. 778+ cr. as of December 31, 2024. As of March 31, 2025, it had 122 employees on its payroll and 106 contract workers on various sites.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of fresh equity shares issue worth Rs. 119.00 cr. (approx. 16760560 equity shares at the upper cap). The company has announced a price band of Rs. 67 – Rs. 71 per equity shares of Rs. 10 each. The issue opens for subscription on June 24, 2025, and will close on June 26, 2025. The minimum application to be made is for 211 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 28.07% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 75.00 cr. for working capital, Rs. 14.26 cr. for capex on purchase of construction equipment/machineries, and the rest for general corporate purposes. 

The sole Book Running Lead Managers (BRLM) to this issue is Mefcom Capital Markets Ltd., while KFin Technologies Ltd., is the registrar to the issue. Mefcom Securities Ltd. is a syndicate member.

Having issued/converted initial equity shares at par, the company issued further equity shares in the price range of Rs. 211 – Rs. 960 per share (based on Rs. 10 FV), between November 2008, and July 2024. It has also issued bonus shares in the ratio of 1 for 3 in October 2005, 1 for 1 in October 2008, and 16 for 1 in July 2024. The average cost of acquisition of shares by the promoters is Rs. NIL, and Rs. 1.79 per share. 

Post-IPO, its current paid-up equity capital of Rs. 42.96 cr. will stand enhanced to Rs. 59.72 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 424.01 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. 286.78 cr. / Rs. 5.20 cr. (FY22), Rs. 235.17 cr. / Rs. 4.85 cr. (FY23), and Rs. 334.81 cr. / Rs. 15.38 cr. (FY24). For 9M of FY25 ended on December 31, 2024, it earned a net profit of Rs. 17.79 cr. on a total income of Rs. 256.74 cr. It posted declined top and bottom lines for FY23.

For the last three fiscals, the company has posted an average EPS of Rs. 2.37 and an average RoNW of 14.00 %. The issue is priced at a P/BV of 3.06 based on its NAV of Rs. 23.24 as of December 31, 2024, and at a P/BV of 1.94 based on its post-IPO NAV of Rs. 36.64 per share (at the upper cap). 

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 17.88. Based on FY24 earnings, the P/E stands at 27.52. Thus, the issue is fully priced. 

The company has reported PAT margins of 1.81% (FY22), 2.06% (FY23), 4.59% (FY24), 6.93% (9M-FY25), and RoCE margins of 15.78%, 12.59%, 23.07%, 24.09% respectively, for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in September 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown B L Kashyap, Ceigall India, PSP Projects, Capacite Infra, and Ahluwalia Contracts as their listed peers. They are trading at a P/E of 84.4, 14.6, 51.9, 13.4, and 29.6 (as of June 19, 2025). However, they are not truly comparable on an apple-to-apple basis. These peer compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 1st mandate from Mefcom Capital in the ongoing fiscal and has not past mandate track records.