Get ready for the first mainboard Initial Public Offering (IPO) of August! The Highway Infrastructure IPO is set to open next week, starting August 5th. This highly anticipated IPO is already generating significant buzz, with its Grey Market Premium (GMP) trading above 55% even before applications commence.
This article delves into the details of this attractive offering, its issue size, financials, and what investors should consider for the upcoming IPO.
Highway Infrastructure IPO Overview
The Highway Infrastructure IPO is poised to be the first mainboard IPO of August. The subscription window for this IPO will be open for three days: from August 5th to August 7th.
Key IPO Details
- Face Value: Each equity share has a face value of ₹5.
- Application Price: Applicants must select the upper price band (cut-off price) when applying to maximize their chances of allotment. Do not select the lower price band or a ₹20 price band.
- Minimum Lot Size: Investors need to apply for a minimum of 211 equity shares per lot.
- Total Issue Size: The total issue size for the Highway Infrastructure IPO is ₹130 crore.
- Issue Type: This IPO is a combination of a Fresh Issue and an Offer for Sale (OFS).
- Fresh Issue: ₹97.52 crore will be raised directly by the company for its operations.
- Offer for Sale: ₹32.48 crore will go to the promoters and existing shareholders who are selling their stakes.
- Listing: The company will be listed on both the BSE and NSE stock exchanges.
IPO Subscription Categories
The total issue size will be distributed among different investor categories as follows:
- Qualified Institutional Buyers (QIBs): 30% of the total issue size. It’s noted that this is lower than the typical 50% for mainboard IPOs.
- Retail Investors: 40% of the total issue size.
- High Net Worth Individuals (HNIs): 30% of the total issue size, including both Big HNI and Small HNI categories.
The overall subscription performance will largely depend on the anchor investor list and the response from QIBs on the first and second days of subscription.
Important Dates to Remember
- Opening Date: August 5th
- Closing Date: August 7th
- Allotment Finalization: August 8th
- Refund Initiation (if not allotted): August 11th
- Shares Credit to Demat Account: August 11th
- Listing Date (BSE & NSE): August 12th
Minimum Application Amounts
Investors will require the following approximate amounts to apply in different categories:
- Retail Category (Minimum Lot): ₹14,770
- Small HNI Category (Minimum): ₹26,780
- Big HNI Category (Minimum): ₹14,360
Financial Performance Overview (FY23-FY25)
The company has provided financial data up to FY25, showcasing its performance over recent years:
- Assets: The company’s assets have shown consistent growth, from ₹156 crore in FY23 to ₹203 crore in FY24, and further to ₹331 crore in FY25.
- Total Income: Total income increased from ₹456 crore in FY23 to ₹577 crore in FY24. However, it saw a slight dip to ₹504 crore in FY25.
- Profit After Tax (PAT): Despite the dip in revenue in FY25, the company’s PAT has improved, rising from ₹14 crore in FY23 to ₹21.41 crore in FY24, and reaching ₹22.40 crore in FY25.
- EBITDA: EBITDA has fluctuated, standing at ₹27 crore in FY23, increasing to ₹38 crore in FY24, and then adjusting to ₹31.32 crore in FY25.
- Net Worth: Net worth has grown steadily from ₹74-75 crore in FY23 to ₹100 crore in FY24, and ₹117 crore in FY25.
- Reserves & Surplus: The company’s reserves and surplus have increased from ₹63 crore in FY23 to ₹83 crore in FY24, and ₹84 crore in FY25.
- Total Borrowing: Total borrowing was ₹63 crore in FY23, rising to ₹70 crore in FY24, and ₹72 crore in FY25. While increasing, the debt is considered somewhat under control.
Key Financial Ratios
A look at the key financial ratios reveals further insights:
- Return on Equity (ROE): Approximately 19%
- Return on Capital Employed (ROCE): Approximately 17%
- Debt-to-Equity Ratio: 0.61
- Return on Net Worth: 19.03%
- Profit After Tax Margin: 4.44% (indicating a need for improvement)
- EBITDA Margin: 6.32%
- Price to Book Value (P/B): 3.44 (suggesting scope for improvement)
- Price-to-Earnings (P/E): 18.06 (The company’s P/E ratio indicates it has left a slight valuation gap compared to its peer competitors, which is contributing to the positive Grey Market Premium.)
Objectives of the IPO
The funds raised through the Fresh Issue (approximately ₹94 crore, of which ₹65 crore is specifically mentioned for working capital) are primarily intended for:
- Fulfilling working capital requirements.
- General corporate purposes.
- A portion of the funds from the Offer for Sale will go to the promoters selling their stakes.
Grey Market Premium (GMP) & Listing Expectations
Earlier in the morning, the Grey Market Premium (GMP) was ₹34, indicating a potential listing gain of approximately 48-49%. Currently, the GMP has risen to ₹39, suggesting a listing price of around ₹19 above the issue price. This translates to an estimated 56% listing gain or approximately ₹8,229 per lot based on the current GMP.
Investment Strategy
While the GMP shows strong positive momentum, it is crucial to remember that Grey Market Premiums are subject to fluctuations. Investors should not base their application decisions solely on GMP. Instead, it is advisable to consider the subscription numbers on the first and second days, assess personal risk-reward tolerance, and evaluate prevailing market conditions, especially given the current market volatility.
For further queries regarding the Highway Infrastructure IPO, feel free to ask in the comments.
