On September 17, IPO’s of Ircon may give a push to the primary market. The issue will close on September 19.
Before subscribing IPO 10 things you should know about the Ircon International Issues:
1. Business description :
Ircon International company specializes in infrastructure projects like mechanical works, development of commercial, residential, bridges, electricals, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, roads, highways, commercial and industrial areas. It has five overseas project offices in Sri Lanka, Bangladesh, Malaysia, South Africa, and Algeria to provide onsite support overseas.
2. Fundraising :
IRCON aims to raise Rs 465.54 crores at the lower end and Rs 470.5 crore at the higher end of the price band, through the public issue.
3. About Public Issue:
The public issue comprises an offer for sale of 99,05,157 equity shares by its promoter, The President of India, acting through the Ministry of Railways, Government of India.
The offer includes a reservation of up to 5,00,000 shares for subscription by eligible employees. The offer and the net offer will constitute 10.53 % and 10.00 % of the post offer paid-up equity share capital of the company respectively. Retail investors and eligible employees will get shares at a discount of Rs 10 per share on the final offer price. Bids can be made for a minimum lot of 30 equity shares and in multiples of 30 equity shares thereafter.
4. Risk factors of the business:
Lower railway budgets, change in government policies, higher dependency on railway segment (86.7 percent of March 2018 order book)Vigilance issues raised by statutory auditors, Materialisation of contingent liabilities can impact financials.,delay in regulatory approvals which could impact the execution timeline and prolonged time taken to secure international orders are some of the key risks for Ircon.
5. Consistent dividend payer
The company is consistently paying a dividend and has an average dividend payout ratio of over 40% during FY15-18. At the higher price band, the dividend yield comes out to be 4.3 %, which seems to be attractive for dividend investors.
6. Key Strengths of the Company:
Strong financial performance and credit profile, visible growth through robust order book and steady execution. Good execution track record through strong operating system and control are some of the key strengths.
7. The complexion of the issue :
The IPO consists of entirely offering for sale (OFS) of 0.99 crore shares (10.5 percent of post-dilution equity) by the Government of India. Of the total issue size, 5,00,000 shares or 5 percent of the issue size shall be reserved for employees. Retail investors and employees will be offered a discount of Rs 10 per share. As the issue is 100 percent OFS, the company will not receive any fund from the issue.
8. Business strategy :
The company is looking to expand its portfolio with BOT/design, build, finance, operate, transfer (DBFOT)/EPC/HAM contracts along with projects development and operation via JVs and SPVs. The company intends to explore different models of project execution to optimize project portfolio. The company will continue expanding geographical footprint within and beyond India. The company is gradually moving from generating income only through individual projects to regularly generating revenue and profits through subsidiaries and joint venture companies.
9. Application money:
At the upper price band, retail investors need around Rs 14,000 to bid for a lot of 30 shares.
The equity shares will be listed on both BSE and the National Stock Exchange (NSE).
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