Bharat Road Network
Limited (BRNL) made a flat debut on the bourses by listing
at Rs 204.90 on the BSE, against its initial public offer (IPO) price of Rs 205 per share. On NSE, BRNL listed right at its issue price of Rs 205.
The stock recovered by over 6% to Rs 218.65 against its issue price after hitting an intraday low of Rs 196.50 on the BSE in early trade. It settled at Rs 208, up 1.5% against its IPO price.
The company had raised Rs 600 crore though IPO, which was over-subscribed 1.81 times. The IPO received bids for 53 million shares against the total issue size of 29.3 million shares. The portion set aside for qualified institutional buyers (QIBs) was subscribed 1.33 times, non institutional investors 1.63 times and retail investors 5.69 times.
The company intends to utilise the net proceeds from the issue towards advancing of subordinate debt in form of interest free unsecured loan to its subsidiary, STPL, for part financing of the STPL Project among others.
BRNL is a BOT (build–operate–transfer) company, which is focused on development, implementation, operation and maintenance of roads and highway projects. The company manages over Rs 6,685 crore of road assets including five operating projects and one under construction project aggregating to 2,095 lane km, with average residual life of approximately 18 years and 6 months.
“BRNL is present only in the BOT project segment and lack of presence in the EPC segment makes its highly dependent on the traffic growth and price increase for improving its profitability,” Angel Broking said in an IPO note.
“Though BRNL’s projects are spread across India, the past track record of the numbers doesn’t give enough confidence about sharp improvement in the near term. At the issue price band of Rs 195-205, the stock is offered at 2.6x its pre issue book value (BV) and 1.5x-1.6x its diluted BV. Even established players like IRB, with strong portfolios are trading at similar valuations and hence, we believe the issue price leaves limited scope for further appreciation. Hence, we have a NEUTRAL rating on the issue,” added the report.