HG Infra makes listless debut; lists at par against issue price of Rs 270

At 10:05 am; the stock was trading at Rs 268, 1% lower against issue price on the BSE.

HG Infra Engineering (HGIEL) has made a listless debut on the bourses by listing at Rs 270, at par against its issue price of Rs 270 per share on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The stock fell below its issue price to Rs 265 after hitting high of Rs 275 on few seconds of its listing.

At 10:05 am; it was trading at Rs 268 on the BSE. A combined 4.51 million shares changed hands on the counter on the BSE and NSE so far.

The Rs 4,620 million initial public offer (IPO) of HGIEL was subscribed 4.98 with received bids for 60.4 million shares.  The company issued shares at the top end of the IPO price band of Rs 263 to Rs 270 per share.

The Qualified Institutional Buyers (QIBs) category saw a good demand at 8.37 times. The non-institutional investors (NII) quota was subscribed 4.97 times, while retail individual investors (RII) segment was subscribed 3.08 times, the stock exchange data shows.

Of the net proceeds, around Rs 1,156 million would be utilized to prepay and/or repayment of the debts availed by the company. Another, Rs 900 million would be utilized for the purchase of capital equipment and rest for general corporate purposes.

The company business is seasonal in nature. It generates around 30-35% of the business in the first half of the fiscal, while the rest in second half. In H1 FY18, HGIEL has generated a top-line and EBITDA of Rs 5,673 million and Rs 798 million.

“On valuation front, at higher price band, the company is demanding a P/E valuation of 33x (to its restated FY17 EPS of Rs. 8.2) as compared to peer average of 33.8x. Though the issue seems to be fairly priced with respect to FY17 earnings, it looks attractive considering the FY18E and FY19E earnings.  On other valuation metric front too, the company is demanding a discounted valuation with respect to FY18E and FY19E financials,” Choice Broking said in IPO update had a “SUBSCRIBE” rating for the issue.

HGIEL is an infrastructure construction, development and management company with extensive experience in road projects, including highways, bridges and flyovers.