Chavda Infra Limited IPO

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i. Chavda Infra is an integrated civil construction company offering a diversified range of construction and allied services across residential, commercial and institutional projects in Gujarat, especially in Ahmedabad and Rajkot. They provide their services across the construction value chain, ranging from planning and design to construction and post-construction activities to their clients.

ii. They have in-house capabilities to deliver a project from conceptualization to completion with fast turnaround time from acquisition to launch to completion, which focuses on de-risking and improving return on investment. Their core competence lies in professionally managing the real estate value chain and attracting and retaining talent to maximize value creation.

iii. Since incorporation, they have constructed well-known buildings in Ahmedabad namely Straft Laxuria, Shivalik Parkview and Shivalik Sharda Harmony, being residential projects. AAA Corporate House, Sadbhav House, Solitaire Sky, Sandesh Press, Suyash Solitaire and Solitaire Connect, being commercial projects. AIS Toddler’s Den, Nirma University (old Building) and Zydus School & Excellence, being institutional projects.

iv. Over the years, they have successfully executed more than 100 projects worth ₹ 67,099.45 Lakhs. Their execution capabilities have grown significantly with time, both in terms of the size of projects that we bid for and execute, and the number of projects that we execute simultaneously.

v. The Company has demonstrated a prominent presence in execution of real estate projects and has developed significant expertise and competencies in this field. The Company aim to leverage on its strength and continue expansion into sector which will put ther Company to desired growth trajectory. They derive their revenue from following three business verticals:
a) Contracting Services
b) Development Services
c) Commercial Renting Services

Competitive Strengths

i. Experienced Promoters and Management Team
ii. End-to-end execution capabilities
iii. Optimal Utilization of Resources

Objects of the Chavda Infra Limited IPO:

The company intends to utilize the net proceeds from the issue towards the funding of the following objects: i. To Meet Working Capital Requirements, ii. General corporate purposes, and iii. To meet Public Issue Expenses.
DRHP of Chavda Infra Limited IPO
RHP of Chavda Infra Limited IPO

Chavda Infra Limited IPO Details:

Open Date: Sep 12 2023
Close Date: Sep 14 2023
Total Shares: 6,656,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 43.26 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 60 - 65 Per Equity Share
Listing At: NSE Emerge
Listing Date: Sep 26 2023

Promoters And Management:

Mr. Mahesh Gunvantlal Chavda aged 66 years is Promoters of the company as well as Chairman and Managing Director of the Company. He has completed his Diploma in Plastic Engineering in 1979 from Technical Examination Board, Gujarat State. He is having more than 18 years of experience in the field of Construction and Real Estate industries. He was appointed as a Non-Executive Director in Promoters Category since incorporation of the company i.e. October 8, 2012. Thereafter his designation was changed to Executive Director from FY 2019-20 and subsequently his designation was changed as Chairman and Managing Director for period of 5 years, liable to retire by rotation w.e.f. May 27, 2023 by special resolution of shareholders in an Extra-ordinary General Meeting of the company. Mr. Johil Maheshbhai Chavda aged 34 years is Promoters-Whole Time Director of the company. He holds the Diploma in the Civil Engineering from the B.S. Patel Polytechnic, Ganpat Vidhyanagar, Kherva in year 2009. He is having more than 10 years of experience in the Construction and Real Estate Industries. He is associated with the company since its incorporation as Non-Executive Director in Promoters Category, later on, his designation was changed to Executive Director in FY 2020. Subsequently his designation was changed to Whole Time Director w.e.f. May 27, 2023 by Special Resolution passed in Extra Ordinary General Meeting of Shareholders. Mrs. Dharmistha Maheshkumar Chavda aged 57 years is Promoters-Executive Director of the company. She has completed her Bachelor of Arts from Devi Ahilya Vishwvidhyalay, Indore in the year 1985 She is having more than 10 years of experience in the Construction and Real Estate Industry. She was appointed as Non-Executive Director in Promoters Category of the company with effect from March 1, 2013. Later on, her designation was changed to Executive Director w.e.f. FY 2019-20 and further the terms of appointment were modified by special resolution passed in the Extra Ordinary General Meeting of the company w.e.f. May 26, 2023.

Financials of Chavda Infra Limited IPO:

A. Balance Sheet
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Equity Share Capital 150 150 1,800
Reserves 1,164 1,686 1,240
Borrowings 3,330 4,993 5,329
Trade Payables 3,394 2,987 5,950
Other Liabilities 629 1,065 1,105
Total Liabilities 7,354 9,045 12,384
Net Block 3,375 2,944 3,433
Capital Work in Progress 0 121 0
Investments 2 0 0
Other Assets 78 107 35
Total NC Assets 3,455 3,172 3,468
Receivables 2,014 2,672 4,141
Inventory 2,453 3,609 5,786
Cash & Bank 170 434 309
Other Assets 576 993 1,719
Face value 10 10 10
B. Profit & Loss Statement
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Sales 9,124 10,982 16,189
Raw Material Cost 5,482 5,105 9,855
Change in Inventory -899 -1,156 -2,177
Other Mfr. Exp 2,235 4,143 4,097
Employee Cost 676 894 1,038
Other Expenses 144 433 669
Other Income 7 5 15
EBITDA 1,494 1,569 2,721
EBITDA Margin 16.37% 14.29% 16.81%
Depreciation 525 510 564
Interest 361 327 479
Profit before tax 607 733 1,678
Tax 164 211 473
Net profit 444 521 1,205
NPM (%) 4.86% 4.75% 7.43%
C. Cash Flow Statement
Particular (In Lakhs) Mar-21 Mar-22 Mar-23
Cash From Operating Activity
Profit From Operation 1,460 1,525 2,639
Receivable 296 -1,064 -2,172
Inventory -899 -1,156 -2,177
Payable 342 60 2,731
Working Capital Changes -261 -2,159 -1,618
Direct Taxes -139 -284 -153
Net Cash Inflow from Operating Activity 1060 -918 868
Cash from Investing Activity
Fixed assets purchased -1,238 -201 -932
Fixed assets sold 6 0.6 0
Investments purchased -5 -63 -30
Other investing items 7 4.7 15
Net cash inflow from investing activities -1,230 -258 -947
Cash from Financing Activity
Proceeds from borrowings 434 1663 336
Intrest paid fin -328 -287 -411
Net Cash Flow -63.44 200.05 -154.62
 

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Chavda Infra limited 162 12 4.88 13.3 65 160
PSP Projects Limited 1927 133 36.95 20.9 819 2948
Ahluwalia Contracts (India) Limited 2,838 194 28.96 23.5 724 4,846
*  All the data is as per FY23.

Recommendation on Chavda Infra Limited IPO:

Review and Recommendation of Chavda Infra by IZ team is 5/10

A) Business and Expertise

Chavda Infra Limited is a Gujarat-based civil construction firm specializing in residential, commercial, and institutional projects. With over 100 completed projects valued at ₹670 Cr, the company has a strong presence in Ahmedabad and Rajkot. They have earned a reputation for quick project turnaround, thereby optimizing investment returns.

B) Management Team

Led by Mr. Mahesh Gunvantlal Chavda, the management team brings a wealth of experience to the table. They have effectively steered the company towards consistent growth, aided by their collective experience of over four decades in the construction and real estate industries.

C) Financial Performance

The financial health of Chavda Infra appears robust, with a steady growth in sales from ₹91 Cr in Mar-21 to ₹161 Cr in Mar-23. Likewise, the net profit has almost tripled from ₹4.44 Cr to ₹12 Cr over the same period. The EBITDA margin remains consistent, hovering around 16%. The cash flow statement for Mar-23 indicates a net cash inflow from operating activities of ₹8.68 Cr , signifying the company's operational efficiency. However, it's crucial to note that the company has seen a net cash outflow from investing and financing activities, amounting to ₹9.47 Cr and ₹1.54 Cr respectively. This is indicative of capital investments and debt servicing, which are typical for real estate firm.

IPO Objectives

The IPO aims to raise capital primarily for working capital requirements, general corporate purposes, and public issue expenses. The issue is set to open on Sep 12, 2023, and close on Sep 14, 2023, with an issue price of ₹60 - 65 per equity share.

Market Position and Peer Comparison

While Chavda Infra may not match the revenue numbers of industry giants like PSP Projects and Ahluwalia Contracts, its lower P/E ratio of 13.3 and promising growth trajectory make it a compelling option for investors seeking long-term growth.

Conclusion

The Chavda Infra Limited IPO offers a noteworthy investment opportunity in the civil construction sector, particularly for those interested in Gujarat’s real estate and infrastructure growth. With a solid track record, experienced management, and strong financials, the IPO is well-positioned to attract both retail and institutional investor.

Lead Manager of Chavda Infra Limited IPO:

  1. Beeline Broking Limited

Registrar of Chavda Infra Limited IPO:

  1. Kfin Technology Private Limited

Company Address:

Chavda Infra Limited 304 to 307, 406, 407 B Square I, Near Neptune House, IsconAmbali BRTS Road, Ahmedabad- 380058 Phone: 079 4892 6087 Email: compliance@chavdainfra.com Website: https://www.chavdainfra.com/

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