IPO Review - GR Infraprojects Ltd - ICICI Direct

GR Infraprojects Ltd (GRIL) is an integrated road engineering, procurement and construction (EPC) company with experience in design and construction of various road/highway projects across 15 states in India and having recently diversified into projects in the railway sector. As of March 31, 2021, GRIL's order book was at 19,025.8 crore and comprised 16 EPC projects, 10 HAM projects and three other projects.

Investment Rationale

Focused EPC player with road projects focus

GRIL has over 25 years of experience in executing EPC projects that have been in the road sector comprising construction and development of state and national highways, bridges, culverts, flyovers, airport runways, tunnels and rail over-bridges. Since 2006, the company has executed more than 100 road construction projects and accordingly established its credentials as an EPC player capable of executing a range of construction projects that involve varying degrees of complexity.

Established track record of timely execution

With experience of over 25 years and more than 100 road construction projects executed since 2006, the company believes it has developed an established track record of efficient project management and execution experience, involving trained and skilled manpower, efficient deployment of equipment and an in-house integrated model. These attributes have enabled GRIL to compete projects prior to or by scheduled timelines. In the last three fiscals, all its projects were completed prior to or by the scheduled timelines. In addition, in FY21, FY20 and FY19, of total projects completed, 50%, 50% and 80%, respectively, of such projects were completed before the scheduled completion date.

Strong financial performance, credit rating

The significant growth of its business in the last three fiscal years has contributed significantly to the financial strength. The revenue from operations increased from Rs. 5282.6 crore in FY19 to Rs. 7844.1 crore in FY21 at a CAGR of 21.9% while profit for the year increased from Rs. 716.6 crore in FY19 to Rs. 953.2 crore in FY21 at a CAGR of 15.3%. GRIL's credit rating and relationship with its lenders enables them to raise financing in a timely manner, which helps in maintaining the requisite leverage from the operations. As of March 31, 2021, the company's total borrowings were Rs. 4,495.0 crore. The company's long term rating from Crisil is AA/Stable.

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Source : Equity Bulls

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