Mayasheel Ventures NSE SME IPO review (Apply)

•    The company is engaged in EPC and BOQ basis infra project related activities.
•    Its working model is based on B2G and enjoys necessary certifications.
•    It posted steady growth in its top and bottom lines for the reported periods.
•    Surge in bottom lines for FY24 and FY25 raise eyebrows as it is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears fully priced.
•    Investors may park moderate funds for long term.

ABOUT COMPANY:
Mayasheel Ventures Ltd. (MVL) is involved in the business of construction of Roads and Highways for NHIDCL (National Highways and Infrastructure Development Corporation Ltd.) and other Government Departments. The Company transacts the business to construct, build, alter, convert, improve, design, establish, develop, dismantle, reconstruct all types of technically complex constructions and high value projects like Express ways, National Highways, Flyovers, Bridges.

The company is a “Class A” government contractor issued by Uttar Pradesh Public Works Department (U.P.P.W.D.), which means it is qualified to take on large-scale and complex infrastructure projects. As a "Class A" contractor, it has demonstrated the expertise, financial capability, and technical resources necessary to handle a wide range of projects, from road construction and highways to electrical works and large-scale civil engineering tasks. It undertakes projects on EPC (Engineering, Procurement, and Construction) and BOQ (Bill of Quantity) basis. 

In EPC projects it is responsible for all activities from design, procurement of materials, construction and handover of the project. It is required to prepare project specific architectural and/or structural designs that meet regulatory requirements, procure raw materials and equipment for the relevant project and carrying the actual construction. In Bill of Quantity (BOQ) projects the company undertakes wide range of tasks based on the detailed specifications provided in the BOQ. A Bill of Quantities (BOQ) is a detailed document that lists all the materials, parts, and labour needed for a construction project. BOQ assists in cost estimation, tendering, project planning, cost control, risk reduction, and effective communication. This comprehensive document enables contractors to manage construction projects more efficiently and accurately.

Further, the company has also been involved in various electrical works, including the construction of electrical power houses, installation of streetlights, and development of transmission lines. Though the company has not generated any amount of revenue from these projects in three preceding financial years, However, it is actively seeking new opportunities or feasible assignments in this segment also. The company operates on a Business-to-Government (B2G) model. It primarily serves government departments with most of its revenue generated from government tenders. In 2023, MVL completed the construction of a 14.401 km stretch of two-lane road with hard shoulders on NH 129A in Nagaland, using the EPC mode under the authority of NHIDCL (National Highways & Infrastructure Development Corporation Ltd). Additionally, it takes on sub-contracting assignments for various infrastructure construction projects. This flexible approach enables it to apply skills and expertise to a wide range of construction projects.

Since MVL started the business, it has constructed various roads and national highways such as construction of road over bridge, construction and widening of culvert, construction of drains, improvements and rebuilding of highways, construction of retaining walls on government roads and flyovers. As of March 31, 2025, it had contracts worth Rs. 201.60 cr. (unexecuted) Rs. 383 cr. new contracts, and 294 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5805000 equity shares of Rs. 10 each to mobilize Rs. 27.28 cr. at the upper cap. It has announced a price band of Rs. 44 – Rs. 47 per share. The issue opens for subscription on June 20, 2025, and will close on June 24, 2025. The minimum number of shares to be applied is for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.33% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 4.00 cr. capex on purchase of machinery and equipment, Rs. 14.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Narnolia Financial Services Ltd., and Maashitla Securities Pvt. Ltd., is the registrar to the issue. Prabhat Financial Services Ltd., is the market maker as well as a syndicate member.

The company has issued initial equity shares at par value, and issued further equity capital at a fixed price of Rs. 21 per share in September 2024. The average cost of acquisition of shares by the promoters is Rs. 10.00 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.25 cr. will stand enhanced to Rs. 22.05 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 103.64 cr. 

According to the management, their credibility reaching to a level where they could get base materials directly from the manufacturers / wholesalers which decreases its procurement prices, and their plans for reducing/repaying borrowings brings direct benefit of interest costs, and mixture of this helps them in improving their margins. They are confident of maintaining this trend in coming years. Higher spending by Government on road infra and encouragement augurs well for this segment and the company is set to ripe benefits from this movement. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 127.10 cr. / Rs. 4.75 cr. (FY23), Rs. 131.14 cr. / Rs. 6.51 cr. (FY24), Rs. 172.05 cr. / Rs. 11.34 cr. (FY25). It posted growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company has reported an average EPS of Rs. 5.59 and an average RoNW of 36.64%. The issue is priced at a P/BV of 2.65 based on its NAV of Rs. 17.73 as of March 31, 2025, and at 1.85 P/BV based on its post-IPO NAV of Rs. 25.45 per share (at the upper cap).

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 9.14. Based on FY24 earnings, the P/E stands at 15.93. The issue relatively appears fully priced.

For the reported periods, the company has posted PAT margins of 3.76% (FY23), 5.00% (FY24), 6.63%, (FY25), and RoCE margins of 19.35%, 20.43%, 28.62%, respectively for the referred periods. PAT in percentage terms varies a bit – please refer page nos. 97 and 243 of the offer document.

DIVIDEND POLICY:
The company has not declared any dividends for any financial year. 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 Rachana Infra, and AVP Infra, as their listed peer. They are trading at a P/E of 18.2, and 14.1 (as of June 16, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 17th mandate from Narnolia Financial in the last three fiscals including the ongoing one.  From the last 10 listings, 3 listed at discount and the rest with a premium ranging from 2.60% to 110.36%, on the listing date.