Capacit'e Infraprojects Ltd (CIL) is a Mumbai based construction company focused on Residential, Commercial and Institutional buildings in metro cities across India. Since its incorporation just four years ago, CIL has emerged as one of the largest private residential buildings contractors in the country with impressive customer list such as Lodha Group, Rustomjee, Oberoi Constructions, Brigade Enterprises Limited, The Wadhwa Group, Prestige Estates and Godrej Properties Ltd. Govt's 'Housing for All by 2022' initiative, heightened focus on educational & healthcare infrastructure development and Smart Cities Mission bodes well for Construction Industry.
Robust execution, strong relationships and high-quality construction will lead to repeat orders and enhance new client base. During FY14-17 CIL's business has grown significantly with a revenue/PAT CAGR of 75%/175% respectively. Additionally, the company has been continuously delivering better RoE and RoCE over the last four fiscals coupled with improvement in debt/equity ratio which improved from 4x in FY14 to 0.5x currently. Also CIL has an impressive order book worth Rs 4,602cr, which is 4 times FY17 revenue. The company plans to utilise IPO proceeds towards funding working capital requirements, purchase of capital assets and general corporate purposes.
At an upper price band of Rs 250, CIL is available at a reasonable valuation of 24x on FY17 EPS (Post IPO dilution). Better return ratio and less leveraged balance sheet continue to support valuation. We recommend 'Subscribe' to the issue, with a medium-to-long term perspective.
Purpose of IPO
At the upper price band, total issue size stands at Rs400cr comprising only fresh issue. CIL plans to utilise these proceeds towards funding working capital requirements, purchase of capital assets (system formwork) and general corporate purposes.
- Loss of large clients could adversely affect business, cash flow, operation and financial conditions.
- Dependency on steel price and its availability.
- Regional slowdown in construction activities or economic activity or any adverse regulatory development in locations where projects are located could hamper operations and affect financials.