Goel Construction BSE SME IPO review

•    The company is engaged in construction of industrial plants with major focus on Cement plants, Power plants and Dairy plants.
•    The company posted growth in its top and bottom lines.
•    As of March 31, 2025, it had an order book worth Rs. 438+ cr.
•    Based on its recent financial data, the issue is reasonably priced.
•    Investors may grab it for medium to long term.

PREFACE:
Aho Ashcharyam, the company announced its IPO price band as Rs. 249-262 with a quota of 76000 shares for eligible employees on 29.08.25, and opted for revision upward as per its new IPO price band ad of 02.09.25 that indicated price band of Rs. 250 – 263, and reduced the employees’ quota to 73600 shares. The relevant calculations stand modified accordingly. This kind of last-minute changes puts one and all in an embarrassing situation. Its high time for regulators to curtail such mishaps.

ABOUT COMPANY:
Goel Construction Co. Ltd. (GCCL) is a construction contractor having experience in construction of industrial plants and infrastructure projects. Its primary focus and strength have been deeply rooted in construction of Cement Plant, Power Plant and Dairy Plant and other industrial plants. Its focus is on delivering construction services, ensuring quality, timely execution and adherence to project specifications. GCCL’s understanding of industrial construction requirements of clients, commitment to safety, and the ability to manage complex projects, fosters long term relationship with clients. 

In the last four years it has successfully executed and delivered 19 projects with an aggregate Contract Value of Rs. 1135 cr., across various states in India. As on June 30, 2025, it had 14 ongoing projects across eight states in India, with an Order Book of Rs. 596.60 cr. In 1997, it initiated business operations in the state of Rajasthan, with an initial focus on institutional and infrastructure projects. In 2001, it broadened scope by including construction of industrial plants. During the early stages, the company primarily undertook smaller-scale projects or participated as sub-contractors in larger, more complex projects.

Over the years, it has strengthened execution capabilities and developed managerial expertise in handling large-scale assignments, gradually shifting focus toward executing complete construction projects. One of its initial projects undertaken in Rajasthan had a project value of Rs. 1.59 cr., whereas a project awarded in 2024 in Madhya Pradesh has a project value of Rs. 172 cr. This growth highlights its increasing capacity to undertake entire projects independently. Currently, it is executing six projects, each with a project value exceeding Rs. 100 cr. It has successfully expanded geographical footprint, with a presence in the states of Rajasthan, Andhra Pradesh, Haryana, Gujarat, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Punjab, Maharashtra, Karnataka and Uttar Pradesh. Cement Plant constructions has a lion share in its top line (around 80% average for the last three fiscals). It has order book worth Rs. 438.49 cr. as of March 31, 2025. As of June 30, 2025, it had 1191 employees on its payroll. 

According to the management, it has created a niche place in cement plants constructions and is serving the segment with creamy client in its list. They have strong long-term relations and getting repeat orders from them. Now it is having thrust on power plants and hopes to achieve economy of scale to increase its top line with commensurate surge in bottom lines.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its book building route maiden combo IPO of 3808000 equity shares to mobilize Rs. 100.15 cr. (at the upper cap). The company has announced a price band of Rs. 250 – Rs. 263 per share of Rs. 10 each. The issue consists of 3084400 fresh equity shares issue (worth Rs. 81.12 cr. at the upper cap), and an Offer for Sale (OFS) of 723600 equity shares (worth Rs. 19.03 cr. at the upper cap). The IPO opens for subscription on September 02, 2025, and will close on September 04, 2025. The minimum application to be made is for 800 shares and in multiple of 400 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.35% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 41.74 cr. for capital expenditure on equipments and fleets, Rs. 23.05 cr.  for repayment/prepayment of certain borrowings, and the rest for general corporate purposes.

The company has reserved 73600 shares for its eligible employees’ and offering them a discount of 4% (approx. Rs. 10) Per share. It has also earmarked 1909400 equity shares for the market maker. 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 Srujan Alpha Capital Advisors LLP, while MUFG Intime India Pvt. Ltd. is the registrar to the issue. Choice Equity Broking Pvt. Ltd., and Rikhav Securities Ltd. are the market makers. Choice Equity Broking Pvt. Ltd. is a syndicate member. The issue is underwritten 50% each by Srujan Alpha Capital and Choice Equity Broking. 

The company has issued initial equity shares at par, and issued further equity shares at a fixed price of Rs. 50.00 per share between March 2005, and March 2007. It has also issued bonus shares in the ratio of 5 for 1 in February 2018, and 10 for 1 in March 2025. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.00, Rs. 0.03, Rs. 0.10, Rs. 0.15, Rs. 0.24, Rs. 0.68, and Rs. 1.25 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 11.37 cr. will stand enhanced to Rs. 14.45 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 380.02 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 272.94 cr. / Rs. 14.30 cr. (FY23), Rs. 388.79 cr. / Rs. 22.64 cr. (FY24), and Rs. 594.34 cr. / Rs. 38.32 cr. (FY25). Surge in bottom lines from FY24 onwards raise eyebrows and concern over its sustainability as it is operating in a highly competitive and fragmented segment.

For the last three fiscals, the company has reported an average EPS of Rs. 25.60, and an average RoNW of 30.01%. The issue is priced at a P/BV of 2.27 based on its NAV of Rs. 115.78 as of March 31, 2025, and at a P/BV of 1.79 based on its post-IPO NAV 147.21 per share (at the upper cap). Its debt will turn negligible post IPO and it will attain zero debt status.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 9.92, and based on its FY24 earnings, the P/E stands at 16.78. Thus, based on its recent financial data, the issue appears reasonably priced.

The company has posted PAT margins of 5.28% (FY23), 5.87% (FY24), 6.50% (FY25), and RoCE Margins of 20.96%, 26.43%, 33.69%, respectively for the referred periods. 

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

COMPARISON WITH LISTED PEERS:
As per offer document, the company has shown Power Mech, Suntech Infra, and Ahluwalia Contracts, as their listed peers. They are currently trading at a P/E of around 29.7, 10.7, and 27.8 (as of August 29, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 8th mandate from Srujan Alpha in the last four fiscals (including the ongoing one). Out of last 7 listings, 1 opened at par, and the rest with premium ranging from 5.00% to 32.5 % on the date of listing.