Tuesday, September 12, 2017

Capacite Infraprojects IPO - Details and review

About Capacite Infraprojects

About the company 

Founded in 2012, #Capacite Infraprojects is a fast growing construction company focussed on Residential, Commercial and Institutional buildings, with growth in consolidated revenue from operations from Rs. 2,142.59 million for Fiscal 2014 to Rs. 11,570.40 million for Fiscal 2017, and an Order Book of Rs. 46,024.76 million as at May 31, 2017 comprising  56 ongoing projects. They provide end-to-end construction services for residential buildings (“Residential”), multi-level car parks, corporate office buildings and buildings for commercial purposes (collectively, “Commercial”) and buildings for educational, hospitality and healthcare purposes (“Institutional”). Their projects include constructing concrete building structures as well as composite steel structures. They also provide mechanical, electrical and plumbing (“MEP”) and finishing works.
Company has a order book of Rs. 4600 crore+. The company has bagged worth over Rs. 1500 crore post demotisation.  Company has a reputation of bagging repeat orders from existing clientele, latest being order worth more than Rs. 300 crore from radius developer. The company has 56 ongoing projects. The company grew 75% on revenue CAGR. The company has about 1700 employees and 18000 labour workforce. The company owns construction equipments required for the all stage of the project, hence it has advantage of timely access and also tax benefits on depreciation. The management believes in using latest, viable and suitable technologies for all its project making it a competitive player.

About Promoters - With significant experience in the construction industry, the management is visionary. Promoters has been hands on in the business and driving the growth story. It has significantly experienced board of directors in the sector, ensuring securing projects from big clients and strengthening its position in the field, gives them an edge over competitors.

Clientele - Some of our clients include Kalpataru, Oberoi Constructions Limited, The Wadhwa Group, Saifee Burhani Upliftment Trust, Lodha Group, Rustomjee, Godrej Properties Limited, Brigade Enterprises Limited and Prestige Estates Projects Limited.

Key Financials IN CRORES
Financial Year
Fy 17
Fy 16
Fy 15
Fy 14
Revenue
1165.96
860.246
562.580
216.582
PAT
69.66
48.84
32.04
4.11
Profit margin
5.9%
5.6%
5.6%
1.8%

About the IPO
Capacite is issuing fresh issue of 1.6 crore shares in the IPO. Rs 400 crore to be raised in the issue on its upper price band.  At the price band of 245-250, the stock is available at 23.9-24.4 times of FY17 earnings.


Price Band – 245-250 Rs.
Lot size – 60
Issue open and closing date – 13th Sep – 15th Sep 2017
Finalisation of Basis of Allotment - September 21, 2017
Initiation of refunds - On or about September 22, 2017
Credit of Equity Shares - On or about September 22, 2017
Commencement of trading - On or about September 25, 2017

Bankers to this issue are - 
1. Axis Capital Limited  
2. IIFL Holdings Limited 
3. Vivro Financial Services Private Limited  
IPO Proceeds to be used in 
Funding Working Capital Requirements - 250 Crore
Funding Purchase of Capital Assets - 51.95 crore
AND General Corporate Purposes

Capacite Infra Allocation structure
the Issue is being made through the Book Building Process, in reliance on Regulation 26(1) of the ICDR Regulations, wherein not more than 50% of the Issue shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIB Portion”).Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Investors and not less than 35% of the Issue shall be available for allocation to Retail Individual Investors

Risks to the business
Capacite will have risk of avalibility of large number of contract labours, with help of local contractors and sub-contractor. Issue on this could lead to project completion delays. They may be subject to liability claims or claims for damages or termination of contracts with their clients for failure to meet project milestones or defective work, which may adversely impact their profitability, cash flows, results of operations and reputation. Risks relating to reliance on sub-contractors and third parties for supply of raw materials, non-Core Assets and for providing certain services in the construction of their projects that may adversely affect Capacite reputation, business and financial condition. They are required to obtain approvals for our operations and any failure to obtain licenses and approvals by us could adversely affect our business,

Moneystreets Take on #Capacite Infra IPO

At the upper price band company is quoting a price of 24 PE. The company has kept its focus only on construction, it has registred consistent growth in last 4 years. Man Industries, a close competitor is trading at 16 PE. The IPO is fully priced. However, looking at the clientele and growth numbers, the IPO is attractive. Capacite Infra can be looked at for medium to long term story given government’s focus on housing for all project. No promoter or investors are liquidating their stakes with the IPO, which indicates their strong commitment towards the business and reflects significant growth potential
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