Ceigall IPO – Review Detailed Analysis
Ceigall, a leading infrastructure company, is set to launch its initial public offering (IPO) on August 1, 2024. With over 22 years of experience in building roads, bridges, and highways, Ceigall has established itself as a trusted name in the industry. But is this IPO a good investment opportunity? Read on for a detailed analysis of Ceigall’s financials, growth prospects, and more in our Ceigall IPO – Review Detailed Analysis.
About – Ceigall India
Ceigall IPO – Review
Overview
Ceigall India is an infrastructure company founded in 2002 in Ludhiana, specializing in structural projects like roads, elevated roads, flyovers, bridges, runways, tunnels , expressways, railway over bridge and highways. As an established EPC (engineering procurement and construction) player, Ceigall handles planning, raw material procurement, and construction for various projects.
Project History
The company has grown significantly over the years. The company’s first project in 2006 was worth ₹6.25 crores, followed by a ₹38 crore project in 2014. The last project received was worth ₹1,970 crores. By July 2024, the company completed over 34 road and highway projects in ten states, with 18 projects ongoing (under construction or development).
Ceigall has shown impressive growth, with revenue increasing by 50% CAGR over three years, reaching ₹3,066.19 crores in 2024. The company has reported a net profit of ₹304.91 crores in 2024, with a high return on equity (ROE) consistently. Ceigall’s expertise in infrastructure development, geographical diversification, and strong order book are major positives.
Strength*
- Project Diversification– Diversified portfolio of products, including roads, highways, runways, bridges, tunnels etc.
- Geographical diversification – Presence in 10 states across India.
- 80.31% of revenue comes from NHAI (National Highway Authority of India), ensuring a stable source of income, as payment from government projects is generally certain and less likely to default, meaning that wherever work is done, payment will be received and there will be no loss.
- Debt reduction – ₹413 crores from the ₹684.25 crores raised through IPO will be used to pay off debt.
- Employee portion subscribed more than 4 times (4.21)
- Anchor investors – Many prominent investors have shown interest in CEIGALL. These include Prudential Mutual Fund, Bandhan MF, Axis MF, HDFC MF, Bajaj Allianz Life Insurance, Max Life Insurance, HDFC, Kotak, ICICI, Axis, and foreign investor Nomura. This shows that many investors believe in CEIGALL’s potential.
- Ceigall has an order book size of ₹9,470.84 crores, which is three times more than their last year revenue of ₹3,066.19 crores. This shows that the company has a lot of projects lined up, is growing rapidly, and has significant growth potential.
Weakness*
- Dependency on NHAI (national Highway authority of India), but not a major risk factor
- Increasing debt levels over the years
- Three consecutive years of negative operating cash flow
- Valuation premium compared to industry peers in the construction sector
Reason Why debt increasing year by year?
The company’s debt has been increasing year by year,” the Company CFO explains. “In the construction industry, we utilize two types of funding: fund-based and non-fund based. While fund-based funding is normal and has been accessed, we have also used non-fund based funding, which includes bank guarantees. When undertaking projects or work with partners, we need to provide bank guarantees, which remain live for one year after project completion as a security measure. This is not an actual loan, but it is reflected in the total loan amount.The company is saying that the total loan amount includes bank guarantees, which are live and will be removed after one year. However, both are included, which is why the loan amount appears so large, but it’s not actually that high.
However, the company faces challenges like high debt levels, negative operating cash flow for three consecutive years and high valuation compared to industry peers. Despite this, Ceigall has received interest from prominent investors like HDFC, Kotak, ICICI, Axis, and foreign investor like Nomura.
Ceigall IPO Details
Ceigall IPO Details :
The company plans to raise ₹1,252.66 crores through its IPO, with ₹684.25 crores for company use and ₹568.41 crores for offer for sale, Which will allow existing investors including promoters to release their invested amount. The IPO will open on August 1, 2024, and close on August 5, 2024, with a price band of ₹380-401 per share.
| IPO Date | August 01, 2024 to August 05 , 2024 |
| Listing Date | August 08, 2024 |
| Face Value | ₹5 per share |
| Price band | ₹380 to ₹401 per share |
| Lot Size | 37 Shares |
| Total issue size | 31,238,480 Shares (aggregating up to ₹1,252.66 Cr) |
| Fresh issue | 17,063,640 Shares (aggregating up to ₹684.25 Cr) |
| Offer for sale | 14,174,840 Shares of ₹5 (aggregating up to ₹568.41 Cr) |
| Employee Discount | ₹38 Per Share |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
| Share holding pre issue | 157,136,000 |
| Share holding post issue | 174,199,640 |
Ceigall IPO Reservation
| Investor Category | Shares Offered | Maximum Allottees |
| Anchor Investor Shares Offered | 9,356,581 (29.95%) | NA |
| QIB Shares Offered | 6,237,721 (19.96%) | NA |
| NII (HNI) Shares Offered | 4,678,291 (14.97%) | |
| bNII > ₹10L | 3,118,861 (9.98%) | 6,020 |
| sNII < ₹10L | 1,559,430 (4.99%) | 3,010 |
| Retail Shares Offered | 10,916,012 (34.94%) | 295,027 |
| Employee Shares Offered | 55,096 (0.18%) | NA |
| Total Shares Offered | 31,243,701 (100%) |
Ceigall IPO Anchor investors Details
The Ceigall IPO received bids on July 31, 2024, with 9,356,581 shares offered to anchor investors. The total value of the anchor portion amounts to ₹375.20 crores. The shares are subject to a lock-in period, with 50% of the shares unlocking on September 5, 2024, and the remaining 50% unlocking on November 4, 2024. This means that anchor investors will be restricted from selling their shares until the respective lock-in periods end. See List of ceigall india anchor investors – click here.
| Bid Date | July 31, 2024 |
| Shares offered | 9,356,581 |
| Anchor Portion Size (In Cr.) | 375.20 |
| Anchor lock-in period end date for 50% shares (30 Days) | September 5, 2024 |
| Anchor lock-in period end date for remaining shares (90 Days) | November 4, 2024 |
Ceigall IPO Lot Size
| Application | Lots | Shares | Amount |
| Retail (Min) | 1 | 37 | ₹14,837 |
| Retail (Max) | 13 | 481 | ₹192,881 |
| S-HNI (Min) | 14 | 518 | ₹207,718 |
| S-HNI (Max) | 67 | 2,479 | ₹994,079 |
| B-HNI (Min) | 68 | 2,516 | ₹1,008,916 |
Ceigall IPO Timeline
The Ceigall IPO timeline is as follows: The IPO will open on August 1, 2024, Thursday, and close on August 5, 2024, Monday. The basis of allotment will be determined on August 6, 2024, Tuesday. Following this, refunds will be initiated on August 7, 2024, Wednesday, and shares will be credited to Demat accounts on the same day. Finally, the listing date is scheduled for August 8, 2024, Thursday, marking the first day of trading for Ceigall’s shares on the stock exchange.
| IPO Open Date | August 1, 2024 , Thursday |
| IPO Close Date | August 5, 2024 , Monday |
| Basis of Allotment | August 6, 2024, Tuesday |
| initiation of refunds | August 7, 2024, Wednesday |
| Credit of Shares to Demat | August 7, 2024, Wednesday |
| Listing Date | August 8, 2024, Thursday |
Ceigall Financial Details
Ceigall’s revenue was ₹1,1465.04 million in 2022, which doubled to ₹2,0870.41 million in 2023, and then increased by 1.5 times to ₹3,0661 million in 2024. The company grew at a 50% of Compound Annual Growth Rate (CAGR) over three years.
The margin was 16.40% in 2022, slightly decreased to 14.29% in 2023, but then improved to 17.09% in 2024. Profit grew from ₹187.96 crores in 2022 to ₹300 crores in 2023, and then to ₹523 crores in 2024.
Net worth increased from ₹432 crores in 2022 to ₹593 crores in 2023, and further to ₹906 crores in 2024. Return on Equity (ROE) was 29.19% in 2022, 28.20% in 2023, and 33.57% in 2024. Return on Capital Employed (ROCE) was 29.84% in 2022, 28.67% in 2023, and 31.98% in 2024.
Total borrowings also increased from ₹6521.18 crores in 2022 to ₹1252 crores in 2023, and then to ₹18110.18 crores in 2024.
| Paticulars | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
| Revenue from operations | 30,293.52 | 20,681.68 | 11,337.88 |
| EBITDA | 5,176.62 | 2,956.29 | 1,859.15 |
| EBITDA Margin (%) | 17.09% | 14.29% | 16.40% |
| Profit Before tax | 4,053.54 | 2,251.92 | 1,694.72 |
| Profit After tax | 3,043.07 | 1,672.72 | 1,258.61 |
| Net Worth | 9,064.13 | 5,930.62 | 4,312.51 |
| PAT Margin (%) | 10.05% | 8.09% | 11.10% |
| Fixed Asset Turnover Ratio | 0.14 | 0.17 | 0.17 |
| Total Debt to Equity | 1.17 | 1.18 | 0.73 |
| ROE (%) | 33.57 | 28.20 | 29.19 |
| ROCE (%) | 31.98 | 28.67 | 29.84 |
| Total borrowing | 18,110.18 | 12,525.80 | 6,521.18 |
Key Performance indicators
KPI as of March 31, 2024.
| ROE (%) | 33.57 |
| ROCE (%) | 31.98 |
| Debt/Equity | 1.17 |
| RoNW (%) | 33.57 |
| P/BV | 6.95 |
| PAT Margin (%) | 10.05 |
| Pre IPO | Post IPO | |
| EPS (Rs) | 19.4 | 17.5 |
| P/E (x) | 20.67 | 22.91 |
Ceigall IPO Subscription Status
| Category | Subscription (times) |
| QIB | 0.01 |
| NII | 1.81 |
| bNII (bids above ₹10L) | 1.75 |
| sNII (bids below ₹10L) | 1.93 |
| Retail | 1.72 |
| Employee | 5.95 |
| Total | 1.26 |
Ceigall IPO Grey Market Premium (GMP) today
The Ceigall India IPO shares are being traded in the grey market at a premium of ₹61 per share, as of August 3, 2024 which means premium has decreased by ₹14, from ₹75 to ₹61, compared to the previous day.
The Grey Market Premium (GMP) for Ceigall IPO has been fluctuating over the past few days. As of August 7, 2024, the GMP was ₹13 with a Sub2 Sauda rate of 400/5600, representing 400 shares were traded at a premium of ₹13 per share out of a total of 5600 shares, indicating an estimated listing price of ₹414, a 3.24% increase from the IPO price of ₹401. On August 6, 2024, the GMP was ₹11 with a Sub2 Sauda rate of 300/4200, representing 300 shares were traded at a premium of ₹11 per share out of a total of 4200 shares, indicating an estimated listing price of ₹412, a 2.74% increase.
The GMP has been steadily increasing since July 31, 2024, when it was ₹89 with a Sub2 Sauda rate of 2500/35000, representing 2500 shares were traded at a premium of ₹89 per share out of a total of 35000 shares, indicating an estimated listing price of ₹490, a 22.19% increase. The highest GMP recorded was ₹140 on July 28, 2024, with no Sauda rate available. The IPO price has remained constant at ₹401 throughout this period.
| GMP Date | IPO Price | GMP | Sub2 Sauda rate | Estimated Listing Price | Last Updated |
| 08-08-2024 (Listing) | 401.00 | ₹17.50 | 500/7000 | ₹418.5 (4.36%) | 8 August, 2024 |
| 07-08-2024 | 401.00 | ₹17.50 | 500/7000 | ₹418.5 (4.36%) | 7 August, 2024 |
| 06-08-2024 (Allotment) | 401.00 | ₹11 | 300/4200 | ₹412 (2.74%) | 6 August, 2024 |
| 05-08-2024 (Close) | 401.00 | ₹19 | 500/7000 | ₹420 (4.74%) | 5 August, 2024 |
| 04-08-2024 | 401.00 | ₹53 – | 1500/21000 | ₹454 (13.22%) | 4 August, 2024 |
| 03-08-2024 | 401.00 | ₹53 ↓ | 1500/21000 | ₹454 (13.22%) | 3 August, 2024 |
| 02-08-2024 | 401.00 | ₹60 ↓ | 1700/23800 | ₹461 (14.96%) | 2 August, 2024 |
| 01-08-2024 (Open) | 401.00 | ₹70 ↓ | 2000/28000 | ₹471 (17.46%) | 1 August, 2024 |
| 31-08-2024 | 401.00 | ₹89 ↑ | 2500/35000 | ₹490 (22.19%) | 31 July, 2024 |
| 30-08-2024 | 401.00 | ₹70 ↓ | 2000/28000 | ₹471 (17.46%) | 30 July, 2024 |
| 29-08-2024 | 401.00 | ₹90 ↓ | — | ₹491 (22.44%) | 29 July, 2024 |
| 28-08-2024 | NA | ₹140 ↑ | — | ₹140 (%) | 28 July, 2024 |
| 27-08-2024 | ₹0 | — | ₹ (0%) | 27 July, 2024 |
Ceigall Stock Buy or not
Should you buy Ceigall stock?
The company’s IPO has been fully subscribed, and many experts recommend investing. Ceigall’s financial performance has been good, with increasing profits and revenue. They have a strong order book, which means they have a consistent flow of projects and income opportunities.
Conclusion
In conclusion, Ceigall’s IPO offers an opportunity to invest in an experienced infrastructure company with a strong track record. However, investors should be aware of the company’s high borrowing, negative operating cash flow, and dependence on NHAI. Despite this, it is showing high growth potential for the future it could be a good investment for you.
Also Read
FAQ?
Q: What is Grey Market Premium?
Ans. The grey market premium is the extra amount that investors are willing to pay for the shares before they are officially listed, indicating demand and expectations for the company’s performance.
Q: What is EPC?
Ans. EPC stands for Engineering, Procurement, and Construction.
Q: How will the IPO proceeds be utilized?
Ans. ₹684.25 crores will be used for debt reduction and general corporate purposes, while ₹568.41 crores will be used for offer for sale.
Q: What is the valuation of the company compared to its peers?
Ans. The valuation is slightly higher compared to its peers in the construction industry.
Q: What is the grey market premium for the IPO?
Ans. The grey market premium is ₹61 (August 03,2024).
Q: Who are the anchor investors?
Ans. HDFC, Kotak, ICICI, Axis, and foreign investor Nomura have applied for the IPO.
Q: What is the company’s order book size?
Ans. The order book size is ₹9,470.84 crores, which is 3 times the last year’s revenue of ₹3,066.19 .
Q: What is the company’s revenue growth rate?
Ans. The company has shown a 50% CAGR growth rate over the last three years.
Q: What is Sub2 Sauda rate?
Ans. Subject to Sauda rate is a deal where a buyer pays a fixed price for an IPO application, but only if the seller gets the shares. If the seller doesn’t get the shares, the deal is cancelled and the buyer doesn’t pay. But if the seller does get the shares, the buyer pays the agreed price and gets the shares or the profit. It’s like a bet where the buyer hopes the seller gets the shares. If they do, the buyer pays and gets the shares or profit. If not, the buyer pays nothing. This deal helps the seller by guaranteeing a price, making them feel safe and secure.
⚡ Disclaimer: This article is not written by a financial advisor, and it should not be considered as personalized financial advice. It is essential to consult a financial expert before making any investment decisions or do your own research before investing.