The company was originally founded on December 8, 1995, as “Bapi Construction Electrical Engineering Private Limited” and started its business as a civil contractor for the Indian Railways. They are involved in the business of Railway Infrastructure Development which involves design drawing, supply, Erection and Commissioning of 25KV, 50Hz Single Phase Traction Overhead Equipment.
Their main focus is on the electrification of railways.
The key clients of the company are Eastern Railway, South Eastern Railway, South East Central Railway, Northern Railway, East Coast Railway, North Frontier Railway, East Central Railway, Central Organisation For Railway Electrification (CORE).
Other important clients include RITES Ltd., Durgapur Projects Ltd., Essel Mining Industries Ltd., Adhunik Group, Usha Martin Industries Ltd, Jindal Steel and Power Ltd., Rungta Mines, Haldia Energy Limited, Electrosteel, etc.
The company is now coming up with its IPO in the next few days for the public investors to invest in the company business and future growth.
Let’s figure out, through this detailed review, whether you should be investing in this IPO or not.
BCPL Railway Management Information
Currently, there are 6 Directors on the Board of BCPL Railway Limited.
Jayanta Kumar Ghosh is the Managing Director, Uday Narayan Singh is the Executive Director and Chief Financial Officer, Aparesh Nandi is the Chairman and Non – Executive Director, Swapan Kumar Chakraborty, Sanghamitra Mukherjee and Vijay Mehta are the Independent Directors of BCPL Railway Limited.
Jayanta Kumar Ghosh, Promoter and Managing Director
Mr Jayanta Kumar Ghosh holds a graduate degree in Commerce from the University of Calcutta. He possesses an experience of more than 34 years in the railways’ infrastructure field, 12 years of experience in merchant export business and 2 years of experience in bags and leather industry.
He plays a key role in identifying new business opportunities and making vital decisions for the operations of the company. He also takes care of the marketing and business development of BCPL Railway Infrastructure Limited.
BCPL Railway IPO Data Points
BCPL Railway IPO will open on 5th October and close for subscription on 19th October, 2018. The IPO size will be of 48.60 lakh Equity shares and the face value of each share will be Rs. 10. The offer consists of a fresh issue of 42 lakh equity shares and an offer for sale of 6.60 lakh equity shares by selling shareholders.
Out of these 6.6 lakh equity shares, 2.52 lakh shares will be reserved for subscription by the market makers. 46.08 lakh equity shares will be allocated for subscription by investors, out of which 23.04 lakh equity shares will be allocated to retail individual investors and the rest 23.04 lakh shares will be for allocation to other investors.
The fixed price per share has been set at Rs.10. The IPO size and the IPO Price Band is expected to be up to Rs. 35.
The market lot size is of 4000 equity shares and the shares will be listed on the SME Platform of Bombay Stock Exchange Limited.
BCPL Railway Infrastructure Financial Performance
The revenues showed an increase of 44.73% to Rs.5,063.59 lakhs for the financial year 2017-2018 from Rs.3498.76 lakhs during the previous period.
Profit after tax for the financial year ended March 31, 2018, was Rs. 404.55 lakhs for the fiscal year 2018 which was 7.99% of the total income.
For the Financial Year ended (in ₹ Lakhs)
For the Financial Year Ended March 31, 2018
For the Financial Year Ended March 31 ,2017
For the Financial Year Ended March 31, 2016
Profit After Tax (PAT)
Basic Earnings Per Share
PAT for the financial year ended March 31, 2017, was Rs. 127.2 lakhs which were 3.64% of the total revenues of the company.
The growth in total revenues and total assets is healthy and consistent but the sudden increase in PAT in the fiscal year 2018 as compared to fiscal 2017 raises concerns.
The EPS also shows the same sudden increase from Rs. 1.02 in the fiscal year 2017 to Rs. 5.96 in fiscal 2017.
The numbers of return on net worth of the company were 3%, 3.82% and 10.85% for the fiscal years ended March 31, 2016, March 31, 2017, and March 31, 2018, respectively.
BCPL Railway IPO Objectives
The BCPL Railway IPO consists of two parts:
The proceeds from the offer for sale of 6.6 lakh shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be given to the company for its operations.
The proceeds from the fresh issue of shares will be used for meeting the working capital requirement. Also, the company will be benefitted by BCPL Railway IPO through enhancement of brand image and brand name.
The visibility of the company will also increase across the country through this issue.
BCPL Railway IPO Events
BCPL Railway Infrastructure filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on August 10, 2018, for the 100% fixed price IPO. The offer will open on 5th October and close on 19th October.
The finalisation of basis of allotment is expected to happen by 23rd October and the initiation of refunds is expected to start by 24th October. The transfer of shares to demat accounts is expected to start on 25th October and the expected listing date will be 29th October, 2018.
BCPL Railway IPO Recommendation
Now, let us examine different strengths, weaknesses, opportunities as well as threats related to the business of BCPL Railway Infrastructure Limited.
Due to decades of experience of successfully implementing large projects for eastern, southeastern, east coast railway and northern railway and many large companies in the Orissa, Jharkhand and Chhattisgarh, they have a goodwill in the market.
Their experience speaks a lot about their performance.
The management and promoters are well qualified and experienced in this field and are able to understand and manage the requirements of their clients. Besides the experienced management, they also have a panel of experts who act as advisors for organizing and managing project work.
Besides this, the industry in which BCPL Railway Infrastructure is operating is of national importance and immense growth potential. They have also shown a good track record of execution of projects for their clients.
They share a good long-standing relationship with their vendors which acts as a strength for the company. Other than these strengths, they also have huge opportunities in Indian Railways.
They have some weaknesses like the small scope of work, operations in oversaturated zones, and dependence on only one client too much.
Now, let us discuss some of the risks related to the business.
There are legal proceedings going on currently which involve the company, its group companies, its Promoters, Directors. Any adverse decisions in these proceedings may have a negative effect on the business.
The industry is dependent on labour to a large extent. If they are not managed properly, it may adversely affect the business.
A number of regulatory approvals, licences, permits for various things and registrations are required for the smooth functioning of the company. Any delays or inability to obtain any of them poses another risk for the operations of the company.
Dependence on third-party transportation providers for obtaining raw materials from suppliers and making the delivery of final products to their customers poses another risk.
There is no assurance that enough capital will be available for the company to implement its future growth and expansion strategies.
Macroeconomic factors like slowdown of Indian economy can have an adverse effect on the business. If the raw material cannot be obtained in enough quantities or desired prices, the financial performance of the company can be affected.
The operations of BCPL Railway Infrastructure are mainly concentrated in oversaturated Railway Zones which may affect the performance of the company.
Shortage or non-availability of power facilities and lack of alternate arrangements for working capital requirements pose anther risks for the company. Also, like any other business, there is a risk of inability to implement their business strategies.
From the financial point of view, the sudden increase in PAT and EPS in the financial year ended March 31, 2018, from the previous year is a matter of concern and it is yet to be seen whether the company is able to sustain such high growth in profits.
After analysing both the strengths and risks related to the business, we can say that the investors should remain cautious and may invest in the BCPL Railway IPO for the long term. It is possible that short-term gains may not be significant for investors.
In case you are looking to apply for this IPO or stock market investments in general, let us assist you in taking the next steps forward:
BCPL Railway IPO Advisors Information
Gretex Corporate Services Pvt Ltd is acting as the Lead Manager to the issue. Bigshare Services Private is acting as the Registrar for the BCPL Railway IPO.