Likhitha Infrastructure IPO

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1. Likhitha Infrastructure is an Oil & Gas pipeline infrastructure service provider in India. Its business comprises of;

a) Laying of pipeline networks along with the construction of associated facilities.
b) Operations & Maintenance services to the City Gas Distribution (“CGD”) Companies in India.

2. The Company was founded by the Promoter, Mr. Srinivasa Rao Gaddipati, in the year 1998 and has been engaged in the same line of business for over two decades. Over the years, they have diversified the gamut of services being provided by the Company from CrossCountry Pipeline Projects (CCP); City Gas Distribution (CGD) Projects to providing Operation & Maintenance (O&M) Services to CGD Companies.

3. They have a presence in more than 16 states and 2 Union Territories in India. The company has successfully laid over 600 Kms. of Oil and Gas pipelines including steel and Medium-Density Polyethylene (“MDPE”) network in the last 5 years.

4. They have recently executed 10.75” OD x 69 Kms Petroleum Product Pipeline for the first-ever Trans-National Cross-Country Pipeline of South-East Asia connecting India to Nepal, in the Year 2019, for the supply of petroleum products.

5. The company has a total Order Book of Rs. 662 Crores as of July 31, 2020. Out of which, Pipeline Infrastructure consists of 615 Crores and 46 Crores in O&M.

Objects of the Likhitha Infrastructure IPO:

The net proceeds from the IPO will be utilized for the following objectives; a) To meet the general working capital requirements of the business. b) To meet general corporate purposes.

Likhitha Infrastructure IPO Details:

Open Date: Sep 29 2020
Close Date: Oct 07 2020
Total Shares: 5,100,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 61 Cr.
Lot Size: 125 Shares
Issue Price: ₹ 116-120 Per Equity Share
Listing At: NSE,BSE
Listing Date: Oct 12 2020

Promoters And Management:

(i) Mr. Sivasankara Parameshwara Kurup Pillai is the Chairman and Independent Director of the Company. He has been associated with the Company since March 28, 2019. He has done AMIE Mech from Human Resource Development Institute (HRDI) in the year 1972 and has a professional qualification in American Society for Nondestructive Testing (ASNT) Level 3 (Re-validation pending). (ii) Mr. Srinivasa Rao Gaddipati, is the Managing Director of the Company and has been associated with the company since inception. He is having vast technical experience of over three decades in the Oil & Gas infrastructure business and is the guiding force behind the successful execution of our business strategies over the years.

Financials of Likhitha Infrastructure IPO:

Particulars(in Lakh) Mar-18 Mar-19 Mar-20
Revenue 8,707 13,948 16,123
Cost of Material 1,943 4,142 3,713
Construction expenses 3,952 5,389 6,503
Change in Inventory -245 -1,712 -477
Employee Cost 1,622 2,622 2,904
Other Expense 316 575 513
EBITDA 1,119 2,932 2,967
OPM 13% 21% 18%
Other Income 152 106 155
Interest Cost 84 168 136
Depreciation 93 298 309
Profit before tax 1,094 2,572 2,677
Tax 376 744 688
Net Profit 718 1,828 1,989
NPM 8.2% 13.1% 12.3%
Shares 197.25 197.25 197.25
EPS in Rs 3.6 9.3 10.1

Comparison With Peers:

NO peer in the market.

Recommendation on Likhitha Infrastructure IPO:

Review and Recommendation of InvestorZone are 3/10. The company has shown excellent growth in the last 3 years. The valuation at which shares are offered is attractive. The company has 662 Crores of the order book. However, there are a lot of related party transactions that are happening in the company. For Ex: 1. G Srinivasa has been paid 4.80, 5.20, and 3.60 Crores as remuneration and commission income in FY18, FY19, and FY20. 2. G. Likhitha has been paid Rs. 18 lakh and 19 Lakh as professional charges in FY18 and FY19. 3. G. Sri Laxmi has been paid 2.50 and 2 Crores as remuneration and commission income in FY18, and FY19. And moreover, the infra companies are worst affected due to COVID-19.

Lead Manager of Likhitha Infrastructure IPO:

  1. Unistone Capital

Registrar of Likhitha Infrastructure IPO:

  1. Bigshare Services Private Limited

Discussion on Likhitha Infrastructure IPO:

    retail subscription was high..u have mentioned only 2 times …what do u suggest now..looks like an avoid

    Lithika has changed the qib and HNI quota.

    Qib 1%
    HNI 64%
    Retail 35%

    Due to poor response of QIB-

    The issue has been extended.

    IPO OF *LIKHITHA INFRA EXTENDED TILL 7TH OCTOBER* WITH REVISED PRICE BAND OF RS 116/- TO RS 120/-

    Likhita:
    QIB: 0.02 Times
    HNI: 0.85 Times
    Retail: 2.47 Times
    Total 1.00 Times

    Avoid. Until we good a good HNI response. Small company and questionable management activities as shown in Related party transactions.