GR Infraprojects makes stellar debut, lists at 103% premium

The stock more-than-doubled to list at Rs 1,700 over its issue price of Rs 837 per share on the BSE

GR Infraprojects made a stellar debut on the bourses as the market value of its equity shares more-than-doubled or rose 103 per cent to list at Rs 1,700 on the BSE in Monday's session against its issue price of Rs 837 per share.

At 10:01 am, the stock was trading at Rs 1,636 after hitting a high of Rs 1,725 post its listing. Around 167,000 equity shares had changed hands on the counter, the exchange data shows.

Rajasthan-based roads and highways construction major raised Rs 963 crore via initial public offer (IPO). The issue witnessed healthy demand from investors as it received 102.58 times bids. The portion set aside for qualified institutional buyers was subscribed 168.58 times and that of non-institutional investors 238.04 times. Retail investors put in bids for 12.57 times their reserved portion and employees applied for 1.37 times their portion.

As of March 31, 2021, GR Infraprojects had an order book of Rs 19,025.81 crore which comprised 16 engineering, procurement and construction (EPC) projects, 10 hybrid annuity model (HAM) projects and three other projects.

The company is an integrated road EPC company with experience in design and construction of various road and highway projects across 15 states in India. It recently diversified into projects in the railway sector.

Their primary business operations are broadly divided into three categories: civil construction activities, providing EPC services; development of roads and highways on a BOT basis; and manufacturing activities, processing bitumen, manufacturing thermoplastic road-marking paint and road signage and fabricating and galvanizing metal crash barriers.

Most of the brokerages had recommended subscribed rating for the IPO given the company's comfortable order book, robust bid pipeline with overall infra-push in the economy, stellar execution pace with most projects getting completed before/within stipulated time, geographical diversification, strong EBITDA and PAT margins and controlled debt levels.

Considering the government’s focus on enhancing infrastructure assets in the country, primarily the road construction space, GR Infra will continue to attract private capital, as per analysts. GR Infra with its efficient operations is well placed to benefit from the growth in the sector, however, concerns on the sustainability of the EPC profitability in the near term linger, they said.