HG Infra Engineering IPO Review

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HG Infra Engineering IPO

7.3

Company Background

7.5/10

Price Band

6.5/10

Company Financials

8.0/10

Industry Situation

7.0/10

Reliability

7.5/10

Pros

  • Strong Financials
  • Set Revenue Streams
  • Experienced Management

Cons

  • Relatively high Issue price
IPO NameHG Infra Engineering IPONewgen Software Technologies Limited IPO
Opening Date26th February, 2018
Shares Issue Size1,21,37,0701,21,37,070
Face Value₹10
IPO Price Band₹263 - ₹270
Bid Lot55
Total Bid Amount₹14,465 - ₹14,850
Listing AtNSE, BSE
Retail Allocation35%
Estimated IPO Size₹457.8 - ₹462 Crore
Day#No. of Shares SubscribedShares Subscription %age
Day 113,52,06510.92%
Day 253,19,49044%
Day 33,73,68,100~300%

HG Infra Engineering Background

HG Infra Engineering Limited is a Jodhpur (Rajasthan) based Infrastructure company with its corporate office in Jaipur, capital of Rajasthan. The company was founded on 21st January 2003 by Mr Hodal Singh who currently serves as the promoter of the company.

It is an ISO 9001:2015, ISO 14001:2004, OHSAS 18001:2007 certified company in the construction business and works on multiple infrastructure based projects such as Bridges, roads and highways. Apart from that, there are multiple civil construction based projects such as runways, railways & land development where HG Infra Engineering Limited has operations in.

Some of the recent projects HG Infra Engineering Limited has completed include:

  • Construction of Kuberpur to Fatehabad Road worth ₹306 Crore
  • Six Laning of the existing Kishangarh-Ajmer road worth ₹56.38 Crore
  • Construction of pavement on Yamuna Expressway worth ₹116 Crore
  • Construction of four laning of Jaipur-Tonk-Deoli section worth ₹303 Crore

At the same time, some of the clients of HG Infra Engineering Limited are:

  • NHAI
  • Jaipur Development Authority
  • MORTH
  • PWD Rajasthan

In order to cater to such projects, HG Infra Engineering Limited has in-house workshops, equipment including HMPs, Crushers, Dozers, Loaders, Transportation equipment, JCBs, water tankers etc which are generally heavy duty and an expensive affair for certain.

The business has received multiple awards and acknowledgements in Health & Safety, Environmental management, quality management from different certification bodies.

HG Infra Engineering Management

Like we mention in our IPO reviews, it is very crucial to look at the background of the company management, the kind of business experience they along to go along with their formal education.

This gives you a brief idea of what kind of team is going to handle the hard-earned capital that you might be investing in this company through this IPO.

 

 

In this IPO issue, the top management executives including Harendra Singh, Vijendra Singh and Girish Pal Singh are selling off up to 10 lakh shares each while Hodal Singh, promoter of the group is selling off up to 30 lakh shares.

HG Infra Engineering IPO Data Points

Now, we are talking about the real thing, right?

Let’s talk about the data points, the numbers that give you a quick glimpse into how the IPO is going to be positioned and whether it would make sense for you to invest in it.

So!

The HG Infra Engineering IPO opens on 26th February and you will have a duration of 3 days in case you are interested to bid for this IPO. The bidding closes on 28th of February.

This book-built IPO issue has been kept at the face value of ₹10 while the issue price has been kept in the range of ₹263 t0 ₹270. In case you are looking to bid for this IPO, you will need to bid for 55 shares in one lot. That basically converts your minimum bid to ₹14,465 to ₹14,850. You can choose to bid for as many lots as possible till you reach the maximum retail cap of ₹2 Lakh.

This ₹460 Crore odd worth IPO will be finally listed on the exchanges (both NSE and BSE) on 9th March 2018.

Here is the Red Herring Prospectus of the HG Infra Engineering IPO for reference.

The IPO is going to be managed by HDFC & SBI Capital Markets.

HG Infra Engineering Financial Performance

Now, for people who want to have a complete objective idea about this upcoming HG Infra Engineering IPO, it is important for them to understand the financial performance of this company over the last 5 years or so.

If you observe such data points closely, then the picture gets relatively much clearer on whether you should be going ahead with an IPO or not.

Here is how the business has performed in the last 5 financial years:

 

Now, let’s understand what numbers shown above, imply.

As mentioned above, HG Infra Engineering is asset-heavy and owns multiple machines and workshops. In the recent past, HG Infra Engineering has been able to increase its assets even further.

If we talk about the top and bottom lines of the business, HG Infra Engineering, apart from the FY2015, has seen a consistent increase in its revenue as well PAT (profit after taxes) numbers. In fact, for the last year i.e. FY2017, the business saw a 43% improvement in its profits.

In simpler terms, HG Infra Engineering certainly impresses with its consistent financial performance over a reasonable period of last 5 years.

HG Infra Engineering IPO Metrics

Apart from the financial performance, you must also have a quick check at some of the important financial metrics of HG Infra Engineering before making a decision.

Here are the details:

 

HG Infra Engineering IPO Objective

HG Infra Engineering is coming up with this IPO issue for 3 specific reasons, including:

  • Increase its asset base even further by purchasing capital equipment.
  • Repayment and pre-payment of few debts and loans taken by the business
  • General corporate purposes

If we go a little deep into it, the equipment purchase will take up ₹90 Crore worth of IPO funding raised. This equipment purchase will include laying, loading, plant and material handling equipment to be used in infrastructure projects.

Then ₹115.55 Crores will be taken up in repayment of some of the existing loans and debts the business took from several parties.  This capital value may be increased if required.

A part of the issue funds will also be used for general corporate purposes but will not exceed more than 25% of the overall issue value.

HG Infra Engineering IPO Events

Moving ahead, let’s quickly glance at some of the important dates that you should know in case you are interested to place a bid in this IPO.

EventDate
IPO Open Date26th February, 2018
IPO Close Date28th February, 2018
Finalization of Basis of Allotment6th March, 2018
Initiation of Refund7th March, 2018
Credit of Shares to Demat Accounts8th March, 2018
Listing on Exchange9th March, 2018

 

Like mentioned above, the IPO opens on 26th of February and you can bid for 3 days until 28th February. The decision of finalization of stocks to be allocated to specific traders will be done by 6th March 2018.

Unfortunately, if you do not get any lot(s), then either the amount will be unblocked from your bank account (if you used ASBA for IPO) or your amount will be credited back to your trading account by 7th March 2018. However, in case you are allocated with the shares, corresponding stocks will be credited to your demat account by 8th March 2018.

HG Infra Engineering will be listed on respective exchanges on 9th March 2018.

HG Infra Engineering Contact Information

H.G. Infra Engineering Limited

Registered Office:
14, Panchwati Colony, Ratanada, Jodhpur-342001(Raj.)
Phone: 0291-2000307
Fax Number: 0291-2515327

Corporate Office:
III Floor, Sheel Mohar Plaza, A-1, Tilak Marg,
C-Scheme, Jaipur- 302001(Raj.)
Call Number: 0141-4106040 Fax Number: 0141-4106044

Email: info@hginfra.com

 

HG Infra Engineering – Recommendation

HG Infra Engineering is one of those IPOs that comes from a business who is way too much clean. The business has pretty reasonable financial performance, experienced management team, hold of multiple clients and respective infrastructure projects.

These are some of the points that certainly suggest going ahead with this IPO.

However, the price band of this IPO is marginally on a higher side. The business has given their quantitative reasoning where they have tried to justify the issue price but looking at the industry trends, the IPO would have been better placed somewhere around ₹225 instead of the finalized issue price of around ₹265.

Rest, there is not much of an issue and the IPO looks good (although a bit expensive) for long-term investment.


* The recommendation is just our viewpoint and you are advised to check with your financial advisory and/or stockbroker before investing any money in this IPO. A Digital Blogger bears no responsibility in such investments and the corresponding profits/losses.

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