IRCON International Limited IPO

Apply 9
Avoid 2

(A) History and Business of the IRCON International

(i) Ircon International Limited (IRCON), is a Mini Ratna government company incorporated by Central Government (Ministry of Railways) under the Companies Act, 1956 on 28th April, 1976 originally under the name Indian Railway Construction Company Limited, IRCON has widespread operations in several States in India and in other countries(Malaysia, Nepal, Bangladesh, Mozambique, Ethiopia, Afganistan, U.K. Algeria & Sri Lanka Now.

(ii) The Company has a long-standing reputation as a sectoral leader in Transportation Infrastructure amongst the public sector construction companies in the Country with specialization in the execution of Railway Projects on the turnkey basis or otherwise. The Company is known for its quality, commitment, and consistency in terms of its performance. After commencing business as a railway construction company it diversified progressively since 1985 to roads, buildings, electrical sub-station and distribution, airport construction, commercial complexes, as well as to metro works.

(iii) As a construction organization, the Company operates in the entire spectrum of construction activities and infrastructure services; Railways and highway Construction, Tunnels & Bridges, Railway Workshops, EHP sub-station (engineering and constructions) and MRTS being the core competency areas.

(iv) The Company has so far completed more than 120 projects in more than 24 countries across the globe, and 376 projects in India.

(B) Opportunities Ahead

(i)Railways– The main focus area of Railways would be modernization and up-gradation of identified corridors, commissioning of new railway lines doubling of about 3500 km, re-development of about 400 railway stations, feeding of about 700 railway stations with solar power, etc. High-Speed Rail Corporation set up by Indian Railways for implementing Mumbai-Ahmedabad high-speed rail corridor under Japanese funding may also afford business opportunities in the railway sector.

(ii) Roads–  Development of national highways under NHDP, improvement of road connectivity in left-wing extremism affected areas, special accelerated Road Development Programme for North-Eastern Region (SARDP-NE),National Highway Inter-connectivity Improvement Programme (NHIIP), improvement in the efficiency of National Corridors development of economic corridors/feeder routes, rural roads under PMGSY, Bharatmala programme to develop road connectivity to Border areas, the emphasis would also be on the development of roads  for coastal connectivity including road connectivity for non-major ports.

(iii) Electrical Projects– Indian Railways has decided to electrify 24,400 km track by 2020-21 under ‘Mission Electrification’. Ircon has also been awarded the electrification work of ‘MathuraKasganj -Kalyanpur’ and ‘Katni-Singrauli’ at an estimated cost of Rs. 305.90 crore and Rs. 258.36 crore respectively.

(iv) International arena opportunities exist in countries like Malaysia, Bangladesh, Bhutan, Sri Lanka, and Iran.

(C) Present Projects in the Kitty

(i) Presently, Ircon is executing construction of railway line in J&K, Sivok-Rangpo, Jayanagar (India) to Bijalpura (Nepal).Jogbani to Biratnagar, etc.

(ii) The setting of new rail coach factory at Rae Bareli.

(iii) Doubling projects for Katni Singrauli; Rampur Dumra Tal Rajendrapul, Kiul-Gaya, and Hajipur Bachwara; Akhaura-Agartala Rail Link projects.

(iv) Setting up of three electric loco sheds at Bondamunda, Daund, and Mughalsarai; Road over Bridges in Jharkhand under Pradhan Mantri Gram Sadak Yojna (PMGSY).

(v) Design and Construction of Civil, Building and Track Works of Vaitarna-Sachin section and JNPT Vaitrana Section of DFC project.

(vi) Construction of Railway Siding at Nagarnar, in Chhattisgarh and for Darlipali Super Thermal Power project.

(vii) Electrical works under RAPDRP-Part B Project in the State of Jammu & Kashmir and Uttar Pradesh.

(viii) Design, Supply, Installation etc. of receiving-cum-traction and auxiliary main sub-station; Metro works for Delhi.

(D)  Sectorial Performance of IRCON

(i) A sector-wise comparative position for the last three years is given below:

Sector 2014-15(cr) 2015-16(cr) 2016-17(cr)
Railways 2688 1914 2074
Highways 228 237 589
Electrical 13 199 253
Buildings 19 67 78
Others 2 2 1

(ii) Contribution of foreign projects to total income:

Sector 2014-15(cr) 2015-16(cr) 2016-17(cr)
Foreign 868 506 339
Domestic 2254 2354 2915

(E) Interaction with Management by Bloomberg Quint

Objects of the IRCON International Limited IPO:

Objectives of IRCON IPO are: (i) To carry out the disinvestment of up to 9,905,157 Equity Shares, including Employee Reservation Portion, by the Selling Shareholder, constituting Offer paid up Equity Share capital our Company (ii) To achieve the benefits of listing the Equity Shares on the Stock Exchanges. Our Company will not receive any proceeds from the Offer and all proceeds shall go to the Selling Shareholder

IRCON International Limited IPO Details:

Current GMP: (20)-(22)
Open Date: Sep 17 2018
Close Date: Sep 19 2018
Total Shares: 9,905,157
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 466.70 Cr.
Lot Size: 30 Shares
Issue Price: ₹ 470-475 Per Equity Share
Retail Discount: 10
Listing At: NSE,BSE
Listing Date: Sep 28 2018

Promoters And Management:

Promoters of IRCON IPO are: Our Promoter is the President of India acting through the Ministry of Railways. Our Promoter, along with its nominees, currently holds 99.71% of the pre-Offer paid-up equity share capital of our Company. After this Offer, our Promoter shall hold 89.18% of the post Offer paid-up equity share capital of our Company.

Capital Structure:

 
(i) Authorized Share Capital (400,000,000  shares at FV@10) 400 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (94,051,574  Shares at FV@10) 94.051 Cr
(iii) Present Issue OFS to public[12%] ( 9,905,157  Shares at FV@10) 10.5% of Paid up capital
(iv) Present Issue OFS to Employees (500,000  Shares at FV@10) .531% of Paid up capital
(v) Reservation for QIB  (4702578 Shares at FV@10) 50%
(vi) Reservation for HNI  (1410773 hares at FV@10) 15%
(vii) Reservation for Retail  (3291804 Shares at FV@10) 35%
(viii) Paid Up Share Capital after the issue 94.051 Cr

Financials of IRCON International Limited IPO:

1. Assets and Liabilities Key Parameters
Year Asset(Cr) Liabilities(Cr) Net Worth(Cr) Book Value Liability/Equity RONW debtor days
FY15 6,521.00 3,046.37 3,474.63 1755 0.88 16% 53
FY16 8,139.41 4,478.65 3,660.76 1849 1.22 11% 63
FY17 9,231.41 5,394.88 3,836.53 388 1.41 10% 52
FY18 12,778.22 9,016.47 3,761.75 400 2.40 11% 60
2. Profit n Loss Key Parameters
Year Revenue(Cr) PAT(Cr) EBITDA Margins Profit Margins Outstanding Shares( Cr) EPS
FY15 3,232.51 563.03 28% 17% 1.9796 284
FY16 2,908.64 393.11 23% 14% 1.9796 199
FY17 3,301.35 383.98 17% 12% 9.898 39
FY18 4,212.40 411.58 15% 10% 9.4052 44
3. Cash Flow Statement(all figures in Cr)
Particulars FY18 FY17 FY16 FY15
(i) Net Cash Generated from Operation -2,533.23 919.26 1,441.42 758.55
(ii) Net Cash Generated from Investment -82.69 -1,795.80 -61.08 -802.06
(iii) Net Cash Generated from Financing Activity 2,734.96 -221.93 -219.32 -189.97
(iv) Effect Of Exchange Difference 1.28 -38.46 108.43 17.33
(iv) Total[ (i)+(ii)+(iii) ] 120.31 -1,136.93 1,269.45 -216.15
(v) Cash and Cash Equivalent (Opening) 1,453.74 2,590.68 1,321.21 1,537.37
(vi) Cash and Cash Equivalent (Closing) 1,574.06 1,453.75 2,590.66 1,321.22
Key Notes: a) The Revenue is growing at CAGR of 9.23% from FY15 to FY18 [Muted Growth]. b) The PAT is growing at CAGR of -9.96% from FY15 to FY18 [Negative Growth]. c) The Annualized EPS[ Post Issue] = 44 d) P/E(post issue)= 10.79 [Attractive Valuation] e) P/B(post issue)= 1.1875 [Attractive Valuation] f) D/E(post issue) = 1.05 [Manageable] g) Mcap/Sales(ideally <2)= 1.06 on FY18 Income [Reasonable priced]. h) EV/EBITDA(ideally <10)= 9.66 [Reasonable priced]. i) Grey Area-  The Company's EBITDA Margins, ROE and ROCE are deteriorating from FY15 to FY18 which is not a good sign for any business. 

Comparison With Peers:

There are no comparable listed companies in India engaged in the same line of business as the Company, hence the comparison with industry peers is not applicable.

Recommendation on IRCON International Limited IPO:

Review and Recommendation of IRCON IPO from IZ Team is: 4/10 [ The company is a Mini-Ratna PSU whose financial performance in the last 4 years is not encouraging in spite of having a strong order book due to falling revenue from foreign projects. The 86% of the business comes from Railways which is being awarded to the third parties via tenders and being a Govt PSU delays may happen in tenders which may hamper growth in future. However, the Pricing has been done excellently by Govt  so listing gains are expected in the range of 15-20%.] 1-5: Fair 5-7: Good 7-10: Excellent

Registrar of IRCON International Limited IPO:

  1. Karvy Computershare Private Limited

Company Address:

IRCON International Limited Plot no. C - 4, District Centre, Saket New Delhi -110017, India Phone No. +91 11 2956 5666 Fax No. +91 11 2652 2000 / 2685 4000 E-mail: cosecy@ircon.org Website: www.ircon.org

Bid Details of IRCON International Limited IPO as on
19-Sep-2018 22:00:04 IST

No.of shares offered No. of shares bid No. of total times
4,702,578 57,808,890 12.29
1,410,774 6,940,950 4.92
3,291,805 33,164,370 10.07
500,000 182,370 0.36
- - -
9,905,157 98,096,580 9.90
No.of shares offered No. of shares bid No. of total times
4,702,578 24,043,170 5.11
1,410,774 2,696,610 1.91
3,291,805 24,056,580 7.31
500,000 110,160 0.22
- - -
9,905,157 50,906,520 5.14
No.of shares offered No. of shares bid No. of total times
4,702,578 33,765,720 7.18
1,410,774 4,244,340 3.01
3,291,805 9,107,790 2.77
500,000 72,210 0.14
- - -
9,905,157 47,190,060 4.76

Total Number of Applications in Retail Category: 922594 (approx)

Application-wise Subscription in Retail Category: 8.11X

Discussion on IRCON International Limited IPO:

    I was applied for IRCON IPO but units not allotted., the amount paid is about 14380 approx., which was not yet returned back to my bank account? when can i get the amount. Application Number:2400024056912729 the msg i received given below:
    “DEAR INVESTOR, No allotment to Application No.2400024056912729 FOR IRCON INTERNATIONAL LIMITED( IRCON ). FOR DETAILS, PLEASE VISIT YOUR REGISTERED MAIL BOX. REGARDS, BSETEAM”

    I want to gain something frim ircon ipo
    For what time period i need to wait
    I get allotment in ipo at 465.

    Wijard can u reply?

      I have clearly given my view on the listing day itself. You should have exited at 450. Please check my old comments.

      Congrats on the allotment. We will decide on Listing day depending upon the market condition. Stay Connected here for more updates. Good Luck for the listing !!!

      Batao ji ab to ki kiss price par sell kro

      At what price i should sell today
      Pls reply immediately

    Seller Circuit in GMP now traded @ Discount so 1000% chance of this open at discount price and if market is posistive on 28-09-2018 then it may try to give one chance to RII to exit at cost to cost Eg. CREDIT ACCESS.

    Expected Listing => 450-455 (It is pure game by QIB & HNI)

    Current GMP => – 20 (Discount)
    Kostak => No Trade seen
    S2 => No Trade seen

    IRCON IPO
    IRCON International Limited – Book Value is around ₹398 and EPS is around ₹42 – We can expect a minimum dividend of around ₹20, translating into a dividend yield of 4.2%.

    IRCON – IPO Last Day Subscription Fig @ 7 P.M.
    QIB – 12.29×closed
    NII – 4.92×closed
    Retail – 9.80×
    EMP – 0.36×
    Total – 9.81×
    Total No. Of Applications – 893,829
    Retail Appln Wise – 8.15×

      Naveen ji valuations are good and we were expecting 10-15% of listing gain but due to the timid response of QIB so far this looks distant. However, we will take a final call at around 2 PM by seeing subscription figure.

      Thanks wizard ji..

      but i did not apply for this

      Can we expect less price than 475 in secondary market?

    This is the 2nd day of the IPO, still very little response from QIB & NII, only RII is rushing. What is the matter?

      The matter may be Govt. PSU company and many companies in past such as HAL, BDL, Cochin Shipyard etc have not performed well. The general elections are nearing. If QIB does not appear in good number till 1-2PM then LIC has to step in to save Govt Face.

    IRCON Ltd Subscription
    18/9/2018 @ 12:52:18 PM
    QIB => 0.01
    NII => 0.06
    RII => 1.44
    EMP => 0.05
    RPS => 0
    TOTAL => 0.49

      No need to post the subscription details. They are automatically getting updated just above the comments section of this page. 🙂

    It Seems employee quota will not get fully subscribed. And balance shares will go to Retail.
    500000 shares for 1175 employees is a bit too much to get fully subscribed.

    500000 ÷ 1175 = Average 425 shares per employee
    425 ÷ 30 = Avg. 14 lots(Approx) per employee.

    For 14 Lots (420 Shares) @ Rs.465 each employee need Rs 1,95,300

    Let’s assume some of these employees would sell in grey to their friends if we see subscription above/near 0.8x-0.85x IMO.

    And if employees are not showing confidence at all on the third day ( i.e less than 0.5x ) it would be bad news.

    Employees have inside information.They are quite sure about listing.Let’s hope for the best.

    Everyone saying that listing gain will be there in IRCON IPO but not much profit for long Term

    If so then who will buy on listing day

    Looks like big investors trying to keep small investors away from IRCONIPO and later it will zoom like RITES which was slow for few days after listing

    So what’s the opinion on IRCON IPO

    New Member to this site can ask anything on this portal and our team of expert will help them with the solutions.

    IRCON IPO Review:-

    IPO GMP (Grey Market Premium is just Rs. 20-30 whereas it’s offer price is Rs. 475.

    Hence, one may not get much listing gains in this stock. Our recommendation is to buy any IPO only if the listing gains is expected to be more than 15-20% to balance the risks involved, funds getting struck for many days etc.

    Hence, one may Skip this IPO and may buy later from secondary market as much as you want, upon seeing the listing trend etc.

    Hope it helps. 🙂

    FinancialIQ Wealth Management Services.

    #HouseViews On #IRCON IPO

    ICICI Direct Subscribe
    Choice Subscribe
    Antique Subscribe
    Nirmal Bang Subscribe
    Motilal Subscribe for Listing Gains
    Ventura Subscribe
    HEM Sec Subscribe
    SPA Sec Subscribe

    Realty developer Lodha Group’s proposed Initial Public Offering (IPO) continues to be on track and the company will be taking a call on the timing of the issue after a month, said a top company official.

    “The proposed IPO is very much on the anvil. The company will decide on the *timing of the issue after the inauspicious ‘Shraadh’ period ends*,” said Abhishek Lodha, Managing Director, Lodha Developers in an email response.

    “In addition to commitments from various marquee investors, the company continues to meet with investors as part of its road-show for the proposed issue, Lodha said.

    “The final size of the IPO will be defined when the pricing is decided, as the IPO is part fresh raise and part offer for sale,” Lodha said.

    it is nice company ….gud for long term…..monopoly in railway business …..excellent pick …Hope its Subscription will be more then 60-70 times.

    ICICI Direct Report in terms of Valuation and Outlook

    Ircon’s revenues grew at 29.4% CAGR to | 4001.2 crores in FY16-18. The order book was at a robust 22407 crore, which implies an order book to bill ratio of 5.6x on FY18 numbers, indicating revenue growth getting better ahead. At the IPO price band of 470-475, the stock is available at 10.7-10.9x FY18 EPS. Adjusting for subsidiary investments worth 700 crores, the issue is available at 9.2x FY18 EPS on the higher band, which is an attractive valuation vis-à-vis its peer companies.

    Conclusion- SUBSCRIBE recommendation on the issue at the offer price only for listing gains.

    IRCON International IPO

    (Price Band: INR 470 – 475)

    IRCON International Ltd (IRCON), a Miniratna Public Sector Enterprise, is an integrated Engineering and Construction company, specializing in a diverse range of infrastructure projects, with the primary focus on the railway sector.

    Robust order book providing strong revenue visibility: As of FY18, IRCON’s order book stood at INR 224bn; 5.6x its FY18 revenues, thus providing strong revenue visibility. Given its strong execution track record, it has been successful in winning new projects, resulting in 19% CAGR in its order book over FY15-18. It secured new orders worth INR 6.1bn during FY18. It plans to focus on high value projects (> INR 5bn) to benefit from economies of scale.

    Business diversification to aid growth: Over the years, IRCON has diversified into wide range of infrastructure segments, with primary focus on railways (87%) and highways (6%). It receive orders on tender and nomination basis and undertakes projects on EPC/ BOT model. It caters to both domestic (93% of FY18 order book) and international markets. Business diversification across sectors/geographies ensures that it is not overly dependent on limited clients.

    Financials: Over FY15-17, IRCON’s financials were muted which picked up in FY18, recording revenue/ PAT growth of 31%/24%. Due to decline in foreign projects contribution to revenue in FY16, EBITDA margins fell to 10.6% (21.4% in FY15). Going ahead, IRCON is eyeing more foreign projects to improve growth and margins. The company has consistently paid a dividend over the years with a payout of more than 50% since FY16. It has INR 46.9bn cash & equivalents and debt of INR 32bn in FY18 making it a net debt free company.

    Object of Issue: Entire issue of 9.9mn shares (10.5% of total outstanding shares) is an offer for sale by Government of India. It implies an issue size of INR 4.7bn and post-issue market cap of INR45bn (@ upper price band).

    View: At the upper price band, the IPO is valued at 10.9x FY18 EPS, which appears decent given the order book position and financials (FY18: RoE 10.9%, margin 11.2%, dividend yield 4.3%). IRCON is trying to improve international business and is also looking at diversification to aid growth. There is an INR10/share discount for the retail investors. Considering the above factors, investors can Subscribe for Listing Gains.

    Risks: High dependence on Indian Railways (87% of order book). A significant portion of contracts are awarded on a nomination basis, hence any change in Government policy could materially impact the financials.

    IRCON INTERNATIONAL IPOView: At the upper price band, the IPO is valued at 10.9x FY18 EPS, which appears decent given the order book position and financials (FY18: RoE 10.9%, margin 11.2%, dividend yield 4.3%). IRCON is trying to improve international business and is also looking at diversification to aid growth. There is an INR10/share discount for the retail investors. Considering the above factors, *investors can Subscribe for Listing Gains*

    ***********Announcement*******************

    Guys whosoever reading the messages of IRCON, there is a poll running at the top of the page whereby anyone can hit at ” Apply” and ” Avoid” button. Please cast your vote. The purpose of this voting is for the benefit of all the investors’ community in this forum to know each other view before the opening of IPO. This will also help in taking a unanimous decision whether to ” Apply” or ” Avoid” before the IPO. So guys come and cast your vote.
    Please note that only logged-in users can vote.

    In so many forums people are saying this can be other Rites in making as both caters to railways. We need to understand that the business model of Rites and IRCON are totally different. Rites into consultancy business which is very high margin business and IRCON is construction company whose margins are low. In fact margins of IRCON has gone down in last 4 years as they are not getting enough foreign projects resulted in depletion of its margins from a high of 28% in FY15 to 15% in FY18. No doubt that the company has a good order book but converting it into profits would not be an easy task considering it is a Govt PSU where a lot of unnecessary hurdles comes while implementing projects. Many times tender does not get floated in time results into delay which ultimately affects margins. So in nutshell Rites can’t be compared with IRCON.

    GARDEN REACH SHIPBUILDERS & ENGINEERS LTD
    OPEN 24 SEP
    CLOSE 26 SEP
    PRICE BAND
    115-118
    RETAIL DISCOUNT RS. 5/- PER SHARE
    LOT 120 SHARES

    IRCON IPO – *Market Estimates of oversubscription*:

    RII = 12L Forms = 10.94X Applic. wise (Avg allotment of ~2.75 shares per lot)
    NII = 13K Crs. = ~194X

    Interest cost @5%p.a. for 7days = 45.55paise for 1X

    Thus, for NII the costing = 194 X 45.55 paise = Rs. ~90/- per share (GMP)

    And, for RII the costing = (90+10) X 2.75 = Rs. ~275/- (Kostak)

    IRCON IPO – *GMP Expected*

    GMP 90
    Kostak 275

    IRCON current GMP price is 85/90.If we didn’t find support we may see fast 70/75.

    Dear Admin
    Rajshree Poly is like main line IPO qib 50% HNI 15% Retail 35%. Qib quota is 14,05,000 (Less 8,88,000 Anchor Portion) 5,17,000
    HNi 4,22,000
    Retail 9,85,000

    IRCON International IPO

    17/Sep/18 – Bid/Offer Opening Date
    19/Sep/18 – Bid/Offer Closing Date
    25/Sep/18 – Finalisation of Basis of Allotment
    26/Sep/18 – Unblocking of Funds from ASBA Account
    26/Sep/18 – Credit of Equity Shares to Demat Account
    28/Sep/18 – Commencement of Trading on NSE/BSE

      I had applied for 5 lots but not sanctioned, how to apply in any IPO to get sure of the allotment. L.Rangarajan, Chennai. Mob.9940468300, I remain , thanks

    IRCON International IPO
    No govt company had been a multi bagger. In disinvestment only government makes money . Why waste so much mind over 90 rs premium say 2500 per lot. Buy other listed companies. Buy TCS Infosys with weak rupee probably now settling between 70-75 . These companies will give better returns. Now a new way to loot the people government is planning buy backs in many PSU. What logic is this, first sell and then buy back. Do a study and from what I have known PSU at best give dividend regularly and no or little appreciation in share price. See BEL , NALCO ALL below offer price of ofs. BDL HAL ALSO no listed peer but what use.

      Ircon International IPO:

      Apply for Listing Gain Only

      Listing gain is possible because asking price is Very attractive.

      Government set IPO price very reasonable same as RITES IPO.

      On listing or near term after listing it should trade at P/E of 14-15. Trading price should be 550 – 600.

      One should not forget that this is government company and listing should not be like HDFC.

      IRCON International IPO:

      Everything – fundamentals, financial, order book good but small size IPO. Asking price is reasonable.

      Issue priced at 11 P/E and 1.2 P/b.

      Listing gain is sure and long-term is also Good

      RITES listed at 190 & just after 45 days of listing made high of over 325.More than 60 % return.

      Retail Investors can buy on listing if not allotted as allotment shall be definitely tough (Karvy is the registrar). IMO it should reach 700 level near Diwali.
      Much Cheaper

    Why did the Margins falling in the last few Years?

    The EBITDA margins have gone down from 28% to 15% in the last few years typically due to fewer projects from Foreign countries. The percentage of income from foreign projects was around 27% in FY15 which has gone down to 7% in FY18. This is the main reason for the fall in margins. However, management is confident that in coming years the company’s foreign income will go up to 20-25% in FY20-21 which will improve the EBITDA margins going forward.

    Conclusion: The management commentary can’t be taken a yardstick for investment.

    Purpose of 3200 Cr loan taken from IRFC?

    The company this year has taken a loan of 3200 Cr from Indian Railway And Finance Corporation for the development of 11 Acres commercial land in Bandra. The Railway will pay the Interest and principal payment. The IRCON has given a three year period to find a suitable builder and execute the projects. However, if company is not able to execute the project then it will be taken back by Railways. As far as Revenue is concerned, the company will get 8% of the revenue from the sales of commercial projects.

    IRCON IPO
    IRCON IPO seems to be a very good stock. As the PSU is having some how monopoly and there is no peer competitor, the issue size is small, the company is having only Govt projects, the major clients are Indian Railway, NHAI, all PSUs, PWD etc, its stock may
    be oversubscribed.

    Lets wait and watch

    IRCON International IPO:

    Everything – fundamentals, financial, order book good but small size IPO.

    Asking price is reasonable. Listing gain is sure and long term is also good.

    After huge success of RITES it will oversubscribe in Retail also. I am expecting more than 12 times in Retail.

    Very tough allotment.
    I believe waste of time for Retail investors.

    how much Debt burden is there in the company?

    As per DRHP, the Company has total indebtedness of 3969.7 Cr as of March 2018. The total Equity of the company is 3761.7 Cr. So Debt/Equity= 1.05( Manageable ).

    Return Ratios ka Gyan( ROE and ROCE)

    (i) ROE= FY14( 24.76%), FY15(16.20%),FY16(10%), FY17(10%) and FY18( 10.39%).

    (ii) ROCE= FY14(31.2%), FY15(21.78%), FY16(13.28%), FY17(9.1%), and FY18(7.46%)

    Conclusion: Both the return ratios are deteriorating over the years which is negative for the business.

    Four most powerful tools that Warren Buffett uses to identify value stocks. If you understand them all then you can easily pick value stocks for wealth creation.

    Suppose you are sitting in a beer bar with some of your friends. While drinking the beer you got idea to start your business. The business of printing T-shirts. It requires ₹1,000 to open and start that business but you have only ₹250. You convinced one of your friends sitting with you and he is agree to pay you remaining ₹750.

    Now you have ₹250 as equity ( Investor’s original money invested) and ₹750 is your debt that you have to pay back. You started your business and in very first year your company has generated

    Revenue = ₹200
    Expenses = ₹80
    Operating Profit or EBIT = ₹200- ₹80 = ₹120
    Net Profit (After deduction of TAX and Interest say 20rs.)= ₹100

    Now some of the important terms are as follows:

    Equity or Shareholder’s equity : ₹250
    Debt or Total liability : ₹750
    Total Asset = Asset + Liability i.e. ₹750 + ₹250 = ₹1000

    Now here we go:

    ROE ( Return On Equity) : Many people don’t really understand the real meaning of ROE, they just say, divide net profit to shareholder’s equity and your ROE is ready. I am not saying they are lying but the fact is you need to understand the terms so that you can use it in your analysis part.

    Now in this business
    ROE = Net Profit / Shareholders Equity
    ROE = 100/250 = 40%

    Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested.

    The ROE is useful for comparing the profitability of a company to that of other firms in the same industry. It illustrates who effective the company is at turning the cash put into the business into greater gains and growth for the company and investors. The higher the return on equity, the more efficient the company’s operations are making use of those funds.
    ROA ( Return On Asset):

    ROA = Net Income / Total Assets

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. Here is a twist, Remember that a company’s total assets is the sum of its total liabilities and shareholder’s equity. Both of these types of financing are used to fund the operations of the company. Since a company’s assets are either funded by debt or equity.
    The company has no retained earnings so Reserves and Surplus would be zero.

    So,

    ROA = 100/(250+750+Reserves and surplus)
    ROA = 100/(250+750+0)
    ROA = 10%

    A higher ROA represents how efficiently the company is using its total asset in its core business to generate profits.

    ROA is most useful for comparing companies in the same industry, as different industries use assets differently.
    ROCE ( Return of Capital Employed)

    Return on capital employed (ROCE) is a financial ratio that measures a company’s profitability and the efficiency with which its capital is employed.Here Capital Employed is not the total asset, this capital is the total capital that has been used to generate profits in the company.

    ROCE is calculated as:

    ROCE = EBIT / Capital Employed

    EBIT = Total Revenue – Expenses i.e. 200 – 80 = ₹120
    Total Capital Employed = Equity + Liabilities – Reserves & Surplus

    In this example Total Capital Employed = 250 + 750 – 0 = ₹1000

    ROCE = 120 / 1000 = 12%

    For a company, the ROCE trend over the years is also an important indicator of performance. In general, investors tend to favor companies with stable and rising ROCE numbers over companies where ROCE is volatile and bounces around from one year to the next.
    Debt to Equity Ratio :

    This is very important parameter that simply determines that how much debt the company has on every 1 Rs. invested by original investors

    Debt to Equity Ratio : Total Debt / Shareholder’s equity
    Debt to Equity Ratio : 750/250 = 3

    So Debt/Equity should always be less than or equal to .5
    Before every investment, Deep Company analysis is very important. The company has lots of things to observe, See the financials, concentrate on ratios and margins, compare with peers, study about promoters, keep an eye on liquidity, make sure you know the debt, know future plans, forecast the scope, speak up with indicators and press BUY button. That’s how your wisdom will save you from a massive destruction.

    Valuation ka Gyan for IRCON IPO(P/E, P/B and EV/EBITDA)

    (i) Total Outstanding Shares before or after the issue= 9,40,51,574
    (ii) Total Profit for the FY18= 411 Cr
    (iii) EPS= 43
    (iv) P/E= 11.04
    (v) EV/EBITDA=9.48
    (vi) P/B= 1.1875

    Conclusion- The Govt has done an excellent job again to price the share at such a good valuation.

    (i) Total Shares Offered are – 99,05,157
    (ii) Reservation for the Employee- 5,00,000
    (iii) Total Shares Reserved for Public is -94,05,157
    (iv) QIB Reservation-47,02,578
    (v) HNI Reservation- 14,10,773
    (vi) Retail-32,91,804

    ConclusionSo for a retail category, the issue size is = 156 Cr at an upper side of band.( Approx same as of Rites) In Rites, retailers put application worth approx 2400 Cr. If we consider the same bid this time in IRCON too, it will easily be subscribed around 15x in retail.

    The government is divesting 10% stake or over 99 lakh shares through the IRCON IPO. The company will be hoping to garner about Rs 500 crore from IRCON. These all IPOs Rites, Mazgon Dock, Ircon are a part of strategies for the govt to improve its fiscal deficit by collecting money from the market.

    *IRCON International Limited IPO*

    ◆ Open Date: *Sep 17, 2018*

    ◆ Close Date: *Sep 19, 2018*

    ◆ Allotment Date: *Sep 26, 2018*

    ◆ Listing Date: *Sep 28, 2018*

    ◆ Face Value: Rs 10 Per Equity Share 

    ◆ Issue Price: *Rs 470/- to Rs 475/-* Per Equity Share *(Rs 10/- discount for RII and Employees)*

    ◆ Issue Size: Offer for Sale of 99,05,157 Equity Shares of Rs 10/- each at price of Rs 470/- to Rs 475/- aggregating up to Rs 470.49 Cr

    ◆ Market Lot (Min Amount): *30 Shares (Rs 14,250/-)*
     
    ◆ Listing At (Group): NSE, BSE (B – Group)

    ◆ Registrar: Karvy Computershare Private Limited

    ◆ Lead Manager: IDBI Capital Markets & Securities Limited, Axis Capital Limited, SBI Capital Markets Limited

    ◆ EPS: *Rs 42.13/-*

    ◆ P/E Ratio: *11.27*

    ◆ RoNW: *10.98%*

    ◆ Net Asset Value (NAV) – As on 31.12.17: *Rs 398.51*

    ◆ Promoters: *The President of India acting through Ministry of Railways*

    Mainboard IPO after a long vacation.
    IRCON INTERNATIONAL LTD IPO
    Opening from 17the September to 19th September.

    This is a PSU, government of India undertaking engineering and construction company formerly known as INDIAN RAILWAY CONSTRUCTION COMPANY.

    Further information about the IPO will be updated shortly.

    *Application rate 400*

    IRCON IPO
    Price Band 470-475
    Lot Size 30 shares
    Retail Discount – 10 RS

    Almost Confirm