 "Dilip Buildcon gains 15% on debut")
Shares of infrastructure company Dilip Buildcon ended 15 per cent higher than its issue price during their stock market debut on Thursday.
The stock closed at Rs 252, compared to the initial public offer (IPO) price of Rs 219. The stock hit a high of Rs 255 and a low of Rs 239 on the BSE. The Rs 650-crore IPO had seen 15 times more demand than the shares on offer. The retail (small individual) portion was subscribed 2.3 times, institutional portion was subscribed 10 times and high net worth individual segment had seen 80 times subscription.
They issued new equity shares worth Rs 430 crore to help repay loan dues and for working capital. Another Rs 220 crore of the issue was an Offer for Sale by existing shareholders, including BanyanTree Growth Capital.
“The proceeds should help reduce debt but equity will be needed to fund the recently won National Highways Authority of India BOT (build, operate, transfer) project (Rs 300 crore needed). Corporate governance concerns emanate from pending litigation against promoters and media articles suggesting political connectivity and questionable behaviour,” Ambit had said in a recent report on the company.
Adding: “Whilst growth prospects appear strong, we are surprised and uncertain of sustainability of industry-high Ebitda (operating earnings) margins (22 per cent versus 10-14 per cent for peers in FY15). Meaningful unwinding of working capital is unlikely, given changes in NHAI payment rules. Hence, standalone debt/equity (2.5 times versus less than 0.8 times for peers for FY15) poses risks to net margins,” the report had added.
Barring L&T Infotech, the five recent IPOs have made good returns for investors on their stock market debut (see table).
The stock closed at Rs 252, compared to the initial public offer (IPO) price of Rs 219. The stock hit a high of Rs 255 and a low of Rs 239 on the BSE. The Rs 650-crore IPO had seen 15 times more demand than the shares on offer. The retail (small individual) portion was subscribed 2.3 times, institutional portion was subscribed 10 times and high net worth individual segment had seen 80 times subscription.
They issued new equity shares worth Rs 430 crore to help repay loan dues and for working capital. Another Rs 220 crore of the issue was an Offer for Sale by existing shareholders, including BanyanTree Growth Capital.
“The proceeds should help reduce debt but equity will be needed to fund the recently won National Highways Authority of India BOT (build, operate, transfer) project (Rs 300 crore needed). Corporate governance concerns emanate from pending litigation against promoters and media articles suggesting political connectivity and questionable behaviour,” Ambit had said in a recent report on the company.
Adding: “Whilst growth prospects appear strong, we are surprised and uncertain of sustainability of industry-high Ebitda (operating earnings) margins (22 per cent versus 10-14 per cent for peers in FY15). Meaningful unwinding of working capital is unlikely, given changes in NHAI payment rules. Hence, standalone debt/equity (2.5 times versus less than 0.8 times for peers for FY15) poses risks to net margins,” the report had added.
Barring L&T Infotech, the five recent IPOs have made good returns for investors on their stock market debut (see table).
| Day one performance for last five listings | ||
| Issue size (Rs cr) | Change on listing day (%) | |
| Dilip Buildcon | 654 | 15 |
| Advanced Enzyme Tech | 411 | 32 |
| Larsen & Toubro Infotech | 1,236 | -2 |
| Quess Corp | 400 | 59 |
| Mahanagar Gas | 1,040 | 23 |
| Compiled by BS Research Bureau | ||
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